Under §4980H, applicable large employers (50 or more full-time equivalents (FTEs)) must offer coverage to full- time employees that is affordable to avoid potential §4980H(b) penalties. In addition, individuals enrolling for coverage through a public Exchange will not qualify for subsidized coverage if they are eligible for employer- sponsored group health coverage that is affordable.
Coverage is generally considered “affordable” if the employee contribution for employee-only (single) coverage does not exceed a set percentage (9.86% in 2019) of household income. Note – Coverage is considered affordable for dependents as well, regardless of the contribution amount, so long as the employee-only (single) coverage is affordable. Coverage is also considered “affordable” for purposes of the employer’s satisfying §4980H(b) requirements so long as the employee contribution satisfies at least one of three available safe harbors (i.e., federal poverty level (FPL), rate of pay, or Form W-2), all of which use the same percentage (9.86% for 2019) in their calculations.
