ACA Affordability Threshold for 2027 Announced

§4980H penalty amounts and the affordability percentage are available for 2027.

• The 2027 affordability percentage is 10.22%. IRS Rev Proc 2026-26
• The 2027 §4980H(a) penalty is $3,780 ($315/month), and the 2027 §4980H(b) penalty is $5,670 ($472.50/month). IRS Rev Proc 2026-22

Applicable large employers—those with 50 or more full-time equivalents (FTEs)—are required to offer minimum value, affordable coverage to full-time employees. Small employers (<50 FTEs) are not required to offer any coverage, and if choosing to do so, do not have to make it affordable.

Originally, the required contribution percentage for determining affordability was set at 9.5%. The percentage is adjusted annually. See applicable percentages for 2018-2027 in the table below.

To avoid potential §4980H penalties, ALEs (50 or more full-time equivalents (FTEs)) must offer coverage to full-time employees that:

1. provides minimum value (60% or better actuarial value); and
2. is affordable

ALEs must also offer minimum essential coverage (MEC) to full-time employees’ dependent children (but not spouses).

The affordability percentage adjustments apply for “plan years beginning in…,” and therefore an employer with a non-calendar year must apply the percentage for the year in which the plan year begins. For example, an employer with a medical plan year of July - June would use 9.96% for the plan year beginning in July 2026 and 10.22% for the plan year beginning July 2027.

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