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In Light of Recent Developments, the IRS Revised the Employer Mandate Figure

The Employer Shared Responsibility Provisions of the Affordable Care Act (ACA), more commonly known as the “employer mandate,” require applicable large employers to pay an assessment under the Internal Revenue Code if they fail to offer health coverage to their full-time employees that satisfies certain standards.

This assessment is due if the employer fails to comply with the “employer mandate” provisions of the ACA.

These guidelines include the need that the coverage must be within the financial means of full-time employees.

The amount that an employee contributes toward the cost of coverage cannot exceed 9.5 per cent of the employee’s household income for coverage to be considered affordable for the employee.

The figure of 9.5 per cent is revised annually based on research that examines how health insurance rates have evolved in response to shifting levels of household income.

Throughout history, the cost of health coverage has increased at a rate that is greater than that of income, and the percentage of people who can afford it has consistently been more than 9.5 per cent.


The Internal Revenue Service (IRS) has only recently indicated, as part of a Revenue Procedure, that, based on recent statistics, there will be a sizeable reduction in the percentage for the year 2023. It has been determined that the new percentage will be 9.12 per cent.

As a consequence of this fact, some employers may come to the realisation that the contributions that low-wage employees are required to pay for coverage under their health plans in 2023 will cause the coverage to be regarded as expensive for those employees, which may lead those employers to come to the conclusion that the contributions should be eliminated.

This may be the case because the Affordable Care Act mandates that employees with lower wages pay a bigger proportion of the total cost of their premiums.

If this scenario plays out, the company will be required to pay an assessment for each full-time employee who opts out of receiving health care coverage from the employer and instead obtains subsidised coverage through an Affordable Care Act health insurance exchange.

The assessment will be calculated based on the number of full-time employees who opt out of receiving coverage from the employer.

This fee is going to be charged to the business regardless of whether or not the employee is covered by health insurance provided by the employer.

This assessment is calculated each month that the individuals who are receiving coverage continue to face high premium costs. In the year 2022, the amount that was due was $343.33 each and every single month, which came out to a total of $4,120 for the full calendar year.

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Only “relevant large employers,” which are defined as businesses that have at least 50 full-time staff members, are subject to the employer requirement.

If your company falls into the category of “applicable big employers,” you may be getting ready for the annual enrollment period and calculating how much you will need to charge employees for health care in the year 2023.

When coming to a conclusion about this matter, you might want to give some consideration to the just calculated affordability %.

If you employ a considerable number of low-wage workers, who may opt out of plan coverage to seek subsidized coverage through an exchange, then this review may be especially essential for your business.

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