On May 5, 2017, the IRS issued Revenue Procedure 2017-36 to index the contribution percentages in 2018 for purposes of determining affordability of an employer’s plan under the ACA. These updated affordability percentages are effective for taxable years and plan years beginning Jan. 1, 2018.

This is the first time since these rules were implemented that the affordability contribution percentages have been reduced. Due to this change, employers may need to reduce their employee required contributions for 2018 to meet the adjusted percentage.