Applying the Affordablity Safe Harbors

Question: In applying one of the affordability safe harbors for 2015, is the figure 9.56% applied instead of 9.5%?

Answer: No. Beginning in 2015, the IRS increased the percentage of an employee’s household income-from 9.5% to 9 .56% – that may be charged for the employee’s required contribution and still be considered “affordable” for purposes of the application of the subsection (b) penalty, as provided in Revenue Procedure 2014-37. A large employer assessing the affordability of self-only coverage in 2015 may require an employee to pay up to 9 .56% of household income for coverage, as provided in Code Section 36B(c)(2)(C)(i)(II) and Treasury. Regulation Section 1.36B-2(c)(3)(v)(A)(1) .

But, please be aware that employers that take advantage of one of the affordability safe harbors must continue to use the 9.5% standard specified in Treasury Regulations Section 54.4980H-5(e), as that percentage has not been updated. But the increase in the affordability percentage may give some cushion to employers who have priced the employee cost of coverage for 2015 using the 9.5% standard.


Provided by Larry Grudzien, Attorney-At-Law