The Affordable Care Act's Affordability Rate for 2024: What You Need to Know

The ACA's affordability rate provides a benchmark to determine whether an employer's health coverage offer is affordable

for employees. For 2024, the rate has been set at 8.39%. This means an employee's required contribution for the lowest-cost, self-only coverage that meets the minimum value should not exceed 8.39% of their household income.

If it does, the coverage may be deemed unaffordable, exposing the employer to potential penalties.

Who Does It Apply To?

The affordability standard primarily targets businesses with 50 or more full-time employees or those with a combination of full-time and part-time employees that equates to 50 full-time equivalent employees. If your business falls into this category, it is essential to ensure your health insurance offers align with this rate to avoid potential ACA penalties. To calculate FTE‘s See our calculator below.

Employers who fail to offer affordable health coverage that provides a minimum standard of value can be subject to two primary types of ACA penalties: Penalty A and Penalty B.

Penalty A is incurred if an employer fails to offer minimum essential coverage to at least 95% of its full-time employees (and their dependents), and at least one full-time employee receives a premium tax credit to help pay for coverage on an ACA Exchange.
Penalty B is levied when an employer does offer minimum essential coverage but the coverage does not meet the affordability or minimum value standards. This penalty is incurred for each full-time employee who receives a premium tax credit.

Solution for Businesses Struggling with Participation

For businesses having difficulties meeting the required participation levels for group health insurance, there is a solution. We have a group health insurance company offering plans tailored to meet this need. They require only 5 employees to enroll in their major medical plan, which satisfies both Penalty A and Penalty B requirements. Alternatively, if you are only interested in a Minimum Essential Coverage (MEC) plan, they only require 10 employees which will meet the requirements for Penalty A.

The 8.39% affordability rate for 2024 is a clear indicator that employers need to be proactive in their health insurance offers. For those struggling with participation levels, it's a relief to know solutions are available to help avoid penalties while ensuring employees receive the care they desire.

It is important to stay informed and seek expert guidance when needed. Remember, taking the time to understand these details today can save your business from financial repercussions tomorrow.