IRS Releases 2027 Affordable Care Act (ACA) Affordability Rate
July 30, 2026
Introduction
The IRS has published the 2027 Affordable Care Act (ACA) affordability percentage rate in IRS Revenue Procedure 2026-26. Employer-sponsored health coverage for the 2027 calendar plan year will be considered affordable if the employee’s required contribution for self-only coverage doesn’t exceed 10.22% of their household income for the taxable year. This is an increase from the 2026 rate of 9.96%.
Calculating Affordability
Since employers generally do not know an employee’s household income, the IRS provides the following three affordability safe harbors that applicable large employers (ALEs) may use to determine whether health coverage is affordable:
a) Form W-2 wages
b) Rate of Pay
c) Federal Poverty Level (FPL)
Calculating Affordability Using the FPL Safe Harbor
The FPL Safe Harbor is the easiest to calculate. For 2027 calendar year plans, employers satisfy the FPL Safe Harbor when the required monthly employee contribution for self-only coverage does not exceed 10.22% of the federal poverty line divided by 12.
As the 2027 poverty level guidelines will not be available until the end of January 2027 or later, IRS guidance allows employers to use the poverty guidelines in effect within six months prior to the first day of the employer’s plan year. This means an employer with a plan year starting January 1, 2027, may use the 2026 federal poverty guideline amount to determine the 2027 ACA FPL Safe Harbor monthly threshold amount.
2026 Federal Poverty Level Guidelines (Individual) | 2027 FPL Safe Harbor 10.22% Monthly Threshold |
|---|---|
| $15,960 | $135.93 |
For additional information about the other safe harbors, please refer to these IRS resources:
Minimum Value and Affordability
Minimum Value and Affordability FAQs
Thank you for choosing Paylocity as your valued service 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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