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ACA Affordability Rate Increased to 9.96% for 2026

This alert is of interest to Applicable Large Employers (ALEs) – generally those with 50 or more full-time employees (including full-time equivalent employees). Under the ACA’s employer shared responsibility (“Pay or Play”) provisions, large employers may be subject to a penalty if they do not offer affordable coverage that provides minimum value to their full-time employees and their dependent child(ren).

For plan years beginning in 2026, the Internal Revenue Service has announced that employer-sponsored coverage will generally be considered affordable if the employee’s required contribution for the lowest cost self-only health plan offered does not exceed 9.96% of their household income for the year.

This is an increase from the affordability contribution percentage for 2025, which was 9.02%. As a result, employers may have some flexibility in setting their employee contributions for 2026 to meet the adjusted percentage.

Because employers are unlikely to know an employee’s actual household income, they may use a number of IRS provided safe harbors to determine affordability of their plan offerings. Adjustments to the affordability percentage are important as failure to get the safe harbor calculation correct can lead to costly penalties.

Marshall+Sterling will work with our impacted clients to determine affordability of plan offerings and any needed contribution adjustments in advance of their 2026 renewal.

Please note: The information contained above is for general informational purposes only and does not constitute legal advice.