ACA 2026 Affordability Threshold: What HR & Benefits Leaders Need to Know

New ACA Affordability Rate Released

The IRS released the new Affordable Care Act (ACA) Affordability Rate for employer sponsored health coverage for the 2026 plan year. 

If you’re in HR or handle benefits, you might be thinking, “Okay, so what do I actually do with that number?” Let’s break down the new rate, what it means for your compliance strategy, and what steps you can take now to keep your benefits program—and your sanity—on track. 

What Does “Affordable” Mean Under ACA?

If you’re an Applicable Large Employer (ALE)—translation: you have 50 or more full-time equivalent employees—the ACA says you need to offer coverage that’s “affordable.” Employer sponsored health coverage for a 2026 calendar plan year will be deemed affordable when the employee required contribution for self-only coverage does not exceed 9.96% of the employee’s household income for the taxable year. This is an increase from the 2025 affordability rate of 9.02%. 

Employers using the exact safe harbor dollar amount will have a larger employee contribution for the lowest-cost, self-only option for the 2026 plan year than for the 2025 plan year. This in turn means employers will need to make a larger contribution to meet the affordability threshold. 

Pro Tip: In this context, safe harbor means a method for proving ACA affordability to avoid penalties. 

Why does this matter? Because getting this wrong means possible fines under the Employer Shared Responsibility rules (and trust us, you don’t want that popping up in your inbox). 

What does this mean for employers? 

An ALE may use one or more of the safe harbors, but only if the ALE offers 95% of its full-time employees (“FTE”) and their dependents the opportunity to enroll in coverage that provides minimum value for the employer’s lowest cost self-only coverage offered to the employee.  Employers may use one or more of the three affordability safe harbors (provided it does so on a uniform and consistent basis for all employees in the same category): 

• Form W-2, Box 1 wages
• Rate of pay safe harbor: Multiply the employee’s hourly rate by 130 hours per month.  That’s the baseline “monthly income” for affordability purposes. 
• Federal poverty line (“FPL”) safe harbor: Use the annual federal poverty guidelines to set your max monthly premium. This is the “easy button,” if you want to keep things simple. 
• $15,650 or $129.90 per month for the mainland US (different thresholds apply for Hawaii and Alaska).  

Form W-2, Box 1 Wages 

To meet the Form W-2, Box 1 wages safe harbor, the employee contribution cannot exceed 9.96% of the employee’s wage for the months of coverage offered. Often, the lowest paid employee’s W-2, Box 1 wages are used for this type of affordability analysis, depending on the organization and its constraints. 

Let’s math! 

FPL Safe Harbor for 2026 Calendar Year Plans 

To meet the FPL safe harbor, the employee contribution cannot exceed 9.96% of the FPL for an individual for mainland U.S. ($15,650 for 2026).  Employers should note again that this is an increase from the 2026 plan year. 

(0.0996 x $35,000 (example of annual Box 1, Wage) /12 months = $290.50 per month 

Smart Moves for Staying Compliant (and Keeping Your Costs in Check) 

Let’s be real: no one wakes up excited to talk ACA affordability. But these steps will keep compliance simple and stop surprises in their tracks: 

1. Revisit Your Contribution Strategy: Make sure your contributions pass at least one safe harbor at the new 9.96% threshold. 
2. Run the Numbers (Before the IRS Does): Model different salary and premium scenarios—especially if you have a varied workforce or multiple plans. Don’t guess—simulate! 
3. Phone a Friend (aka, Your Broker/Consultant):  Don’t feel like you have to go it alone. Tap into your benefits consultant—they live for this stuff! 
4. Stay Plugged into Compliance: Subscribe to updates, follow us on LinkedIn or partner with a compliance solution (hi there!) to keep tabs on shifting regulations. 

Ensure Compliance with the 2026 ACA Affordability Rate  

Discover how the new 9.96% threshold impacts your health coverage contributions. Don’t risk penalties—get actionable insights and stay ahead of compliance requirements.  

At ComplianceDashboard, we’re all about helping you stay ahead. With custom compliance calendars and clear task guides, we make sure you avoid compliance stress and keep your focus on higher priorities.