The percentage for determining the affordability of employer-sponsored health coverage under the Affordable Care Act (ACA) for plan years starting in 2026 will increase to 9.96% (up from 9.02% for plan years starting in 2025).
An employer with 50 or more full-time employees and full-time employee equivalents (i.e., an applicable large employer or ALE) must offer minimum essential health coverage that is both affordable and provides minimum value to full-time employees and their eligible dependents or face potential tax penalties. To meet the affordability requirement, the employee contribution for the lowest cost health benefit option offered by the ALE must be no greater than 9.96% (for plan years beginning in 2026) of the full-time employee’s household income.
In lieu of requiring employers to calculate each full-time employee’s household income for the year to determine affordability, the IRS allows the use of three affordability safe harbors:
The FPL safe harbor is determined by multiplying the affordability percentage by the applicable FPL threshold and dividing that product by 12. The 2026 FPL threshold has not yet been released by the U.S. Department of Health and Human Services.
As an example, using the current 2025 FPL threshold, if an employer with a calendar year plan is using the FPL affordability safe harbor for the 2026 plan year, an employee’s contribution (for those employees working in the continental U.S.) cannot exceed 9.96% of $15,650 divided by 12 months — or $129.90 per month.
Note that the employer shared responsibility regulations allow employers to use the FPL guidelines in effect within six months before the first day of the plan year. So, for certain non-calendar year plans in 2026 (for example, a plan with a September 1 plan year), the FPL safe harbor would be determined by multiplying 9.96% by the applicable FPL threshold within six months and dividing that product by 12 (in 2025, for example, the amount for a September 1, 2025 plan year would have been $117.64 per month for the continental U.S. — 9.02% of $15,650 divided by 12 months).
