Employee Benefits
Q1 Considerations: Affordability for Applicable Large Employers
April 23, 2024
Under the ACA, Applicable Large Employers (ALEs) are required to offer “affordable” medical coverage to full-time employees or be subject to a fine. In September 2023, the IRS announced that the 2024 affordability percentage would reduce from the 2023 rate of 9.12% to 8.39% as of January 1, 2024. The U.S. Department of Health and Human Services has just released the 2024 Federal Poverty Level (FPL) amounts, with an increase of 3.3%.
Groups that renew in January through May must use the new year’s affordability percentage but can use the prior year’s FPL. For ALEs that use the FPL Safe Harbor, that calculates to a maximum employee contribution for employee-only coverage on the least expensive medical plan, of $101.94 per month. Groups that renew later in the year can use the 2024 FPL, which calculates to a maximum of $105.29 per month, with higher amounts for Hawaii and Alaska.
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