The IRS has announced (in Rev. Proc. 2021-36, pg 357) that the ACA affordability threshold will decrease to 9.61% starting January 1, 2022. The threshold was previously 9.83% in 2021.
This decreased threshold translates into higher employer contributions towards their employees’ health coverage plans.
Keep in mind, the American Rescue Plan (ARP) passed earlier this year temporarily reduces the affordability cap to 8.5% of an individual’s household income for 2021 and 2022. The new 9.61% threshold may drop to 8.5% as a result of the ARP but that is unknown at this time and you should use 9.61% starting January 1, 2022 unless the IRS publishes a change.
Be assured we are continuing to monitor this and will share additional information when relevant. We are also working to implement this change for current Mize CPAs payroll clients.
We will continue to monitor this and will share additional information when relevant.