The IRS has announced a new ACA affordability rate for 2027 health plan offerings: 10.22%. This number is important because it helps determine how much employers can require employees to contribute toward their own health insurance premiums while still meeting the ACA’s affordability requirements.
The new rate, published by the IRS in Revenue Procedure 2026-26 on July 21, 2026, is up from 9.96% for 2026. It’s also the first time the ACA affordability threshold has crossed into double digits.
What’s Changing?
Employers with 50 or more full-time employees must offer coverage that costs an employee no more than the affordability percentage of their income for the lowest-cost self-only plan. The increase gives employers a bit more room to share premium costs while staying compliant.
Here’s how the three safe harbors shake out for 2027:
- W-2 Wages: An employee earning $85,000 can be charged up to $723.92/month ($85,000 × 10.22% ÷ 12)
- Rate of Pay: An employee earning $20/hour can be charged up to $265.72/month ($20 × 130 hours × 10.22%)
- Federal Poverty Line: Up to $135.93/month for calendar-year 2027 plans, using the $15,960 mainland FPL (up from $129.89 in 2026)
Employer Shared Responsibility Payment penalties are also rising for 2027, to $3,780 per full-time employee under the “no coverage” penalty and $5,670 per affected employee under the “unaffordable coverage” penalty.
Two Things to Remember
It’s plan-year based, not calendar-year. A plan year that began in 2026 keeps using 9.96% for its full duration. A plan year starting July 1, 2026 doesn’t pick up 10.22% until it renews in July 2027.
A higher limit doesn’t mean higher costs. Employers are allowed to charge more, but many continue covering 100% of employee premiums. If your contributions are changing, communicate it well before open enrollment.
Before your 2027 plan year begins, review your contributions, confirm which safe harbor you’re using, and verify your lowest-cost self-only plan still clears the test.
Still have questions about ACA affordability testing? Read our blog about ACA affordability from 2026 or contact us at 651-287-3253.