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2026 ACA Affordability Rate
July 23, 2025
At a Glance
Per IRS Revenue Procedure 2025-25, the Affordable Care Act (ACA) affordability rate for employer-sponsored health coverage will increase to 9.96% of an employee’s household income for the 2026 calendar plan year.
What is the Affordability Rate?
Under the ACA, employer-sponsored health coverage will be considered affordable for a 2026 calendar year plan if the employee’s required contribution for self-only coverage does not exceed 9.96% of their household income for the taxable year. This is an increase from the 2025 calendar plan year rate of 9.02%.
Calculating Affordability
Because employers generally do not know an employee’s household income, the IRS provides three affordability safe harbors that applicable large employers (ALEs) may use to determine affordability:
- Form W-2 Wages
- Rate of Pay
- Federal Poverty Level (FPL)
Calculating Affordability Using the FPL Safe Harbor
For most employers, the FPL safe harbor is the easiest to calculate. For 2026 calendar year plans, the FPL safe harbor is satisfied if the required monthly employee contribution for self-only coverage does not exceed 9.960% of the federal poverty line divided by 12.
The 2026 poverty level guidelines will not be available until the end of January or later, so IRS guidance allows employers to use the guidelines from within six months before the first day of the employer’s plan year. This means an employer with a plan year start date of January 1, 2026, may use the 2025 federal poverty guideline amount to determine the 2026 FPL safe harbor monthly threshold amount.
2025 Annual Poverty Level Guideline (Individual) | 2025 Monthly Poverty Level Guideline (Individual) | 2026 Safe Harbor Monthly Threshold |
| $15,650 | $1,304.17 ($15,650 ÷ 12) | $129.89 ($1,304.17 × 9.960%) |
For additional information about the other affordability safe harbors, refer to the following IRS pages:
Thank you for choosing Paylocity as your Payroll Tax and HCM partner. This information is provided as a courtesy, may change, and is not intended as legal or tax guidance. Employers with questions or concerns outside the scope of a Payroll Service Provider are encouraged to seek the advice of a qualified CPA, Tax Attorney, or Advisor.
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