When I use a word,' Humpty Dumpty said in rather a scornful tone, 'it means just what I choose it to mean—neither more nor less.'
When I use a word,' Humpty Dumpty said in rather a scornful tone, 'it means just what I choose it to mean—neither more nor less.''The question is,' said Alice, 'whether you can make words mean so many different things.'
'The question is,' said Humpty Dumpty, 'which is to be master—that's all.'
—Lewis Carroll, Through the Looking Glass, Alice in Wonderland, Chapter VI: Humpty Dumpty
Is health coverage affordable? Depends on who you ask. And as Humpty Dumpty would say, "which is to be master." When it comes to employer compliance, the IRS is the master when it comes to defining "affordable."
I quote Humpty in light of the recent Internal Revenue Service update to its definition of "affordable" for employee contributions for health coverage in 2024 – see Revenue Procedure 2023-29. The IRS lowered the affordability percentage from 9.12% to 8.39%. To avoid the employer mandate penalty taxes, an "applicable large employer" must offer at least one coverage option that is "affordable", "minimum essential coverage", of "minimum value." (An Applicable Large Employer in 2024 is an employer who had 50 or more Full Time Equivalent employees on business days during 2023.)
More on compliance with this requirement below, after we figure out what the IRS means when it uses the word "affordable."
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