Under the Inexpensive Care Act, taxpayers turn out to be eligible to say the premium tax credit to assist cover the associated fee of a marketplace medical health insurance plan if their required contribution to employer-sponsored medical health insurance exceeds an annual threshold amount. That annual threshold amount is adjusted annually. For the reason that ACA was enacted, the brink percentage has increased in most, but not all, years.
In response to increased inflation, the IRS recently announced that the affordability threshold will decrease significantly, to 9.12% of household income for 2023 (the brink was 9.61% in 2022 and 9.83% in 2021).
We asked two professors and authors of ALM’s Tax Facts with opposing political viewpoints to share their opinions in regards to the decrease to the ACA affordability threshold.
Below is a summary of the talk that ensued between the 2 professors.
Bloink: Inflation is the best we’ve seen in many years. Extraordinary Americans are less in a position to afford medical health insurance than at any point because the ACA was put in force. Decreasing the affordability threshold percentage will serve to be certain that tens of millions of hardworking Americans don’t lose health coverage because they’re unable to afford their required contributions.
Byrnes: This decrease signifies that many employers might be required to pay more for worker coverage in 2023 because employer-sponsored coverage might be deemed “inexpensive” provided that the worker’s required contribution for self-only coverage doesn’t exceed 9.12% of the worker’s household income.
This reduction puts a major recent burden on employers that can now face increased costs due to lowered affordability threshold. Small-business clients are struggling on this high-inflation environment identical to individual taxpayers. Punishing those business owners who’re investing in our economy makes little sense.