2027 ACA Affordability: Threshold Breaks Double DigitsAs employers begin preparing for 2027 open enrollment (yes, it’s almost that time!), one important compliance number deserves attention. IRS Rev. Proc 2026-26 announced the ACA affordability percentage for plan years beginning in 2027 will be 10.22%, up from 9.96% for 2026. This marks the first time the affordability percentage will hit the double-digit mark, welcomed news for employers who have been facing climbing renewals year over year.
Under the ACA, applicable large employers (ALEs) must offer full-time employees (and their dependents) health coverage that both provides minimum value and is ‘affordable’. “Minimum value” means the plan covers at least 60% of expected covered benefit costs, while “affordability” looks at whether the employee’s required contribution for the lowest-cost, self-only tier meets the annual threshold.
Because affordability is measured against household income, and employers typically do not know each employee’s household income, the IRS offers employers three safe harbors to test this metric (W-2 wages, rate of pay, and the federal poverty line). The right safe harbor may depend on the employer’s workforce and contribution strategy, and employers may use different safe harbors for reasonable employee categories, such as hourly and salaried employees, if the method is applied uniformly and consistently within each category.
For context, the affordability percentage has moved significantly in recent years. While the ACA began with 9.5%, the law also contained an index metric. In 2024, the threshold was 8.39%, the lowest in the program’s history. It increased to 9.02% for 2025, rose again to 9.96% for 2026, and will now increase to 10.22% for 2027. While the higher percentage may give employers slightly more flexibility when setting contribution rates, it does not eliminate the need to run the affordability analysis before rates are finalized.
Before finalizing 2027 renewal rates and open enrollment materials, employers should confirm that the employee-only cost for the lowest-cost minimum value plan satisfies ACA affordability under the safe harbor they intend to use. Employers should also make sure the safe harbor is applied consistently within each employee category and coordinated with payroll, enrollment, and ACA reporting processes. Your Heffernan account team is always available to assist with renewal and open enrollment compliance considerations.
Guest Author
Sara Galeb-Roskopp, UC LAW SF, Class of 2028
