Even after issuance of final regulations governing the Employer Shared Responsibility Payment under the Affordable Care Act, it remains unclear whether employer contributions to a cafeteria plan may be used to calculate the employee's portion of the lowest cost, self-only premium amount for purposes of determining affordability.  The Internal Revenue Code provides that an employer-sponsored plan is not affordable if ‘‘the employee's required contribution (within the meaning of section 5000A(e)(1)(B)) with respect to the plan exceeds 9.5 percent of the applicable taxpayer's household income for the taxable year.…"

The term "required contribution" is defined as "the portion of the annual premium which would be paid by the individual (without regard to whether paid through salary contribution or otherwise) for self-only coverage."  (26 U.S.C. 5000A(e)(1)(B), emphasis added.)  While still untested and potentially subject to challenge, the phrase "without regard to whether paid through salary contribution or otherwise" is likely broad enough to reasonably encompass cafeteria plans.

As employers await further guidance on this issue, many continue to factor cafeteria plan contributions into the affordability analysis under ACA's affordability safe harbors.