The IRS has issued 2019 inflation adjustments (Rev. Proc. 2018-34
) for the percentages of household income used to calculate the premium tax credit under the Affordable Care Act and to determine if required employee contributions meet the affordability test for the purpose of ACA excise taxes.
The premium tax credit under Section 36B is generally calculated in a way to limit a taxpayer’s out-of-pocket premium contributions to a certain percentage of household income. This percentage is adjusted each year and for 2019 are as follows:
ACA also subjects employers to potential excise taxes if they fail to offer adequate and affordable coverage. In order for minimum essential coverage to qualify as affordable, the required employee contributions must be below a certain percentage of household income. This percentage is adjusted annually, and for plan years beginning in 2019, is 9.86% of the employee’s household income.
Contact Jeffrey Martin
Partner, Washington National Tax Office
+1 202 521 1526
Tax professional standards statement
This content supports Grant Thornton LLP’s marketing of professional services and is not written tax advice directed at the particular facts and circumstances of any person. If you are interested in the topics presented herein, we encourage you to contact us or an independent tax professional to discuss their potential application to your particular situation. Nothing herein shall be construed as imposing a limitation on any person from disclosing the tax treatment or tax structure of any matter addressed herein. To the extent this content may be considered to contain written tax advice, any written advice contained in, forwarded with or attached to this content is not intended by Grant Thornton LLP to be used, and cannot be used, by any person for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.
The information contained herein is general in nature and is based on authorities that are subject to change. It is not, and should not be construed as, accounting, legal or tax advice provided by Grant Thornton LLP to the reader. This material may not be applicable to, or suitable for, the reader’s specific circumstances or needs and may require consideration of tax and nontax factors not described herein. Contact Grant Thornton LLP or other tax professionals prior to taking any action based upon this information. Changes in tax laws or other factors could affect, on a prospective or retroactive basis, the information contained herein; Grant Thornton LLP assumes no obligation to inform the reader of any such changes. All references to “Section,” “Sec.,” or “§” refer to the Internal Revenue Code of 1986, as amended.