The Internal Revenue Service (IRS) has issued Revenue Procedure 2022-34
providing the indexing adjustment for the required contribution
percentage. For plan years beginning in 2023, the required contribution
percentage is 9.12%, down from 9.61% in 2022.
The affordability
calculation can determine whether an individual can afford
employer-sponsored health coverage and affect whether the individual
would be eligible for a premium tax credit on the health insurance
exchanges. This could affect employers that do not use a safe harbor
method to determine whether the coverage they offer is affordable to
employees.
For plan years beginning in 2023, employer-provided
coverage is considered affordable for an employee if the employee
required contribution is no more than 9.12% of that employee’s household
income. Because applicable large employers generally do not know their
employees’ household incomes, there are three safe harbor methods for
calculating affordability.
Additional Information
IRS Q&As on Employer Shared Responsibility - Affordability (see questions 39-42)
IRS Notice 2015-87 (see question 12 on page 18)