IRS Releases 2027 ACA Affordability Percentage: What Employers Need to Know

The Internal Revenue Service (IRS) has released the Affordable Care Act (ACA) affordability update for 2027, giving employers a new figure to consider when reviewing their health plans and preparing for open enrollment.

The ACA affordability percentage sets the threshold employers use to determine whether coverage is affordable under the law. Under the ACA’s employer shared responsibility rules, employers subject to the requirements must offer full-time employees minimum essential coverage that is affordable and provides minimum value.

Below are the key details from the IRS for plan years beginning in 2027.

ACA Affordability Percentage Rises Above 10% Next Year

In Revenue Procedure 2026-26, the IRS announced the ACA affordability percentage for next year. For 2027, the affordability percentage is 10.22% of an employee’s household income. That’s an increase from the current affordability threshold of 9.96%. 

For purposes of the affordability test, an employee’s required contribution for self-only coverage generally must not exceed 10.22% of household income (assuming other requirements, such as minimum value, are met).

Employers use this affordability percentage as part of the employer shared responsibility affordability safe harbors. Here’s a recap of the three safe harbors employers may use to determine whether coverage is affordable:

• Form W-2 wages, so for example, in 2027, you’d multiply the amount in box 1 by 10.22%
• Rate of pay safe harbor (using the employee’s monthly or hourly rate), and
• The federal poverty line.

The IRS has also announced the ACA employer shared responsibility penalty amounts for 2027. Employers can review the new amounts here.

More info: Revenue Procedure 2026-26