Employer Affordability Guidelines for Health Coverage

This guide outlines the requirements for employer-sponsored group health plans to be considered affordable under the employer shared responsibility rules as defined in §4980H. It details the criteria for determining affordability, including the required employee contribution rates and the IRS affordability safe harbors. Applicable large employers, defined as those with 50 or more full-time equivalents, must ensure that coverage offered to full-time employees meets minimum value and affordability standards to avoid penalties. The guide specifies that coverage is deemed affordable if the employee contribution does not exceed a certain percentage of household income, with specific percentages provided for the years leading up to 2025. Additionally, it explains the three safe harbors available for employers to assess affordability: the Federal Poverty Level, rate of pay, and Form W-2 safe harbor. Each safe harbor is described in detail, including calculations and examples to illustrate how employers can determine compliance with affordability requirements.