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    • IRS Announces Health Plan Affordability Threshold for 2020

    Employer-sponsored health coverage will satisfy the Affordable Care Act (ACA) affordability requirement in 2020 if the lowest-cost, self-only coverage option available to employees does not exceed 9.78% of an employee’s household income. This limit is down from 9.86% in 2019.

    The IRS announced the 2020 shared responsibility affordability percentage on July 22, 2019 in Revenue Procedure 2019-29. Employees’ maximum contribution percentage is adjusted annually by considering the ratio of premium growth to income growth in the preceding calendar year.

    Employers should not overlook the annual inflation-adjusted shift in cost sharing limits for group health plan coverage, as they could face steep penalties for failing to provide affordable coverage under the ACA’s shared responsibility provisions.