Employers Possibly At Risk for Penalties as IRS Decreases ACA Affordability Percentage for 2023

Largest decrease to date in 2023 ACA Affordability Percentage is Good News for Employees; will Challenge Employers as they Price their Health Plans

Part of the requirements under the Affordable Care Act (ACA) Employer Mandate are that employers offer affordable health care options to their benefit eligible employees. On August 4, 2022, the Internal Revenue Service (IRS) announced the upcoming affordability percentage for the 2023 reporting year. This announcement indicates the largest decrease to the affordability percentage index from 9.61% in 2022 to 9.12% for plan years beginning in calendar year 2023. This means the maximum an employer can charge an employee for health care benefits in 2023 will decrease. This change could challenge employers to take a new look at pricing their health plans for next year. 

For employers working to set health plan pricing for 2023 open enrollment this year, it’s important to understand the potential impact. This percentage is important when setting employer contributions for self-only coverage for plans beginning on or after January 1, 2023. Coverage will be considered affordable if the employee’s required contribution for self-only coverage does not exceed 9.12 percent of the employee’s household income.  Employers who are out of compliance are subject to IRS penalties.

When the affordability percentage decreases from year to year, an employee’s cost share may also need to decrease in order to stay within ACA guidelines, which may be welcome news for employees, but  a challenge to employers given the steady increase in overall premiums passed on to employers each year.

In particular, Employers who are currently charging employees the maximum allowable amount while maintaining affordability status will need to take the new 2023 affordability percentage into consideration when establishing their cost sharing for the upcoming plan year.  

For more information check out our blog post, ACA Affordability Rules During Open Enrollment – Insights for HR Professionals, we share information on:

  • Potential penalties
  • How to help correctly determine affordability
  • Considerations when using federal poverty line
  • Preparing for the “family glitch”

Next steps

Determining affordability of your health plans as determined by the ACA can be a challenge every year, especially when you’re trying to navigate the complexities on your own. 

Refer to general guidance on ACA affordability rules in order to help plan ahead as much as possible. You can also contact Equifax Workforce Solutions at any time. We’re happy to help answer your questions and connect you with the products or services that best fit your needs. 

Learn More

And don’t forget to check out our Safe Harbor Info Sheet. Since employers do not often know their employees’ household incomes, the ACA has created safe harbors that can be used in lieu of household income to determine affordability. Learn more about your safe harbor and affordability questions in our Info Sheet.




The information provided is intended as general guidance and is not intended to convey any tax, benefits, or legal advice. For information pertaining to your company and its specific facts and needs, please consult your own tax advisor or legal counsel. Links to sources may be to third party sites. We have no control over and assume no responsibility for the content, privacy policies or practices of any third party sites or services.

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