Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Financial Planning > Tax Planning > Tax Deductions

Debate: When Is Workplace Health Insurance ‘Unaffordable’?

Your article was successfully shared with the contacts you provided.

Under the Affordable Care Act, taxpayers become eligible to claim the premium tax credit to help cover the cost of a marketplace health insurance plan if their required contribution to employer-sponsored health insurance exceeds an annual threshold amount. That annual threshold amount is adjusted each year. Since the ACA was enacted, the threshold 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 threshold 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 about the decrease to the ACA affordability threshold.

Below is a summary of the debate that ensued between the two professors.

Their Votes:



Their Reasons:

Bloink: Inflation is the highest we’ve seen in decades. Ordinary Americans are less able to afford health insurance than at any point since the ACA was put into effect. Decreasing the affordability threshold percentage will serve to ensure that millions of hardworking Americans don’t lose health coverage because they’re unable to afford their required contributions.

Byrnes: This decrease means that many employers will be required to pay more for employee coverage in 2023 because employer-sponsored coverage will be deemed “affordable” only if the employee’s required contribution for self-only coverage does not exceed 9.12% of the employee’s household income. 

This reduction puts a significant new burden on employers that will now face increased costs because of the lowered affordability threshold. Small-business clients are struggling in this high-inflation environment just like individual taxpayers. Punishing those business owners who are investing in our economy makes little sense.


Bloink: The term “inflation adjustment” doesn’t have to signal an upward adjustment. It’s just what it is — an adjustment designed to reflect the current inflation rate. It makes perfect sense that the government would use the inflation adjustment process to reduce costs for ordinary taxpayers given the unprecedentedly high inflation we’re experiencing right now.

Byrnes: Decreasing the affordability threshold merely shifts the burden from one struggling group to another. These increased health care costs will make it more and more difficult for employers to offer quality employer-sponsored health coverage for the foreseeable future.


Bloink: Employers are better able to manage the increased costs than employees. They have the power to negotiate with insurance companies to secure better rates. The law also gives employers many different options to avoid the ACA penalties — including reimbursing employees for the cost of health insurance premiums via individual coverage health reimbursement arrangements. The bottom line is that this decrease in the affordability threshold is a reflection of the reality that employees simply can’t afford the same contribution that they could afford before inflation began to set in.

Byrnes:  Increasing the burden on employers that offer health insurance coverage isn’t the answer right now. Employers are already struggling with increased labor costs in this tight labor market — not to mention the increased cost of goods and supplies necessary to conduct business. One more added burden isn’t going to do anything to encourage employers to continue providing high-quality health coverage going forward.


  • Learn more with Tax Facts, the go-to resource that answers critical tax questions with the latest tax developments. Online subscribers get access to exclusive e-newsletters.
  • Discover more resources on finance and taxes on the NU Resource Center.
  • Follow Tax Facts on LinkedIn and join the conversation on financial planning and targeted tax topics.
  • Get 10% off any Tax Facts product just for being a ThinkAdvisor reader! Complete the free trial form or call 859-692-2205 to learn more or get started today.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.