What is the ACA affordability percentage for 2027?

10.22 percent of household income, for plan years beginning in calendar year 2027. It was 9.96 percent for 2026 plan years.

Does the 10.22% affordability rule apply to a business with fewer than 50 employees?

The employer penalty does not. It only reaches applicable large employers, generally those that averaged at least 50 full-time employees, counting part-timers' hours as full-time equivalents, in the prior year. The percentage still decides whether a smaller employer's workers can get a premium tax credit instead of taking the job-based plan.

What is the 2027 penalty for an employer that doesn't offer affordable health coverage?

For 2027 the indexed amounts are $3,780 a year for an employer that fails to offer coverage and $5,670 a year per full-time employee who gets a premium tax credit despite an offer. The first is figured on full-time headcount minus 30.

What is the 2027 federal poverty line safe harbor premium for employer plans?

EY calculates it at $135.93 a month for employee-only coverage in the 48 contiguous states and Washington, D.C.. That matches 10.22 percent of the $15,960 single-person poverty guideline, divided by 12.

My plan year starts November 1, 2026. Which affordability percentage do I use?

9.96 percent, because that plan year begins in 2026. The 10.22 percent figure applies to plan years beginning in calendar year 2027.

Can a self-employed person earning more than 400% of the poverty line get a premium tax credit in 2027?

Not under the table the IRS published, which stops at 400 percent of the poverty line. The temporary rule that let higher earners qualify was extended only through 2025.

Sally’s column Sunday

Health Coverage Gets a New Affordability Line for 2027: 10.22%. Here's What It Means for Employers and the Self-Employed

Rev. Proc. 2026-26 raises the share of income the IRS treats as affordable for health coverage. Employers with 50 or more full-time workers can charge a bit more, and freelancers buying their own plans will be expected to pay a bit more of the premium.

By SallyJuly 26, 20265 min read

health coverage
employer mandate
premium tax credit
self-employed
IRS guidance

Your to-do list

If you had 50 or more full-time employees on average last year, counting part-timers' hours as full-time equivalents, check 2027 employee-only contributions against 10.22 percent before open enrollment ^{[1, 4, 9]}.
If your plan year doesn't start January 1, use 9.96 percent for a plan year that begins in 2026 and 10.22 percent for one that begins in 2027 ^{[1, 2]}.
Using the poverty-line safe harbor? EY puts the 2027 ceiling for employee-only coverage at $135.93 a month in the 48 contiguous states and D.C. ^[5].
Self-employed and buying a marketplace plan? Estimate 2027 household income against the 400 percent line, which is $63,840 for one person under the January 2026 guidelines ^{[1, 6]}.

Key dates

Nov12026A non-calendar plan year starting this day still uses the 2026 affordability percentage of 9.96 percent
Jan1202710.22 percent affordability percentage and $3,780 / $5,670 employer penalty amounts apply to plan years beginning in 2027

The number is 10.22 percent. On July 21 the IRS set it as the share of household income at which job-based health coverage counts as affordable for 2027, up from 9.96 percent this year ^{[1, 2]}. If you have 50 or more full-time workers, it sets how much you can charge them for coverage. If you buy your own plan as a freelancer or sole proprietor, the same revenue procedure sets how much of the premium you’re expected to cover before a tax credit kicks in ^[1].

What the IRS changed

Rev. Proc. 2026-26 updates two related numbers, both tied to the premium tax credit, the tax credit that helps people pay for marketplace insurance ^[1].

The first is the required contribution percentage. Employer coverage is “affordable” if the employee’s share of the cheapest self-only plan is no more than this share of household income. For plan years beginning in 2027 it is 10.22 percent ^[1]. An employee offered affordable coverage generally can’t get a premium tax credit ^[1].

The second is the applicable percentage table. It sets how much of their income people buying marketplace coverage are expected to put toward a benchmark plan, with the credit covering the rest. For 2027 it runs from 2.15 percent for the lowest incomes up to 10.22 percent for households between 300 and 400 percent of the poverty line ^[1]. For 2026, the same bands run from 2.10 percent to 9.96 percent ^[2].

EY counts this as the third year in a row the affordability threshold has gone up, after 8.39 percent in 2024 and 9.02 percent in 2025 ^[5]. One change sits behind the 2026 and 2027 figures: how premium growth is measured. Starting with 2026, HHS switched to a measure that includes individual-market premiums alongside employer plans, and the IRS is using it again for 2027 ^{[1, 4]}.

Here’s the short version: employers get a little more room, and people buying their own coverage carry a little more of it.

Who has to care about the employer penalty?

The employer side of this comes from Section 4980H, the Affordable Care Act’s “employer shared responsibility” rule, which most people call the employer mandate ^[8]. It only reaches an applicable large employer:

An employer that averaged at least 50 full-time employees during the prior calendar year ^[8].
“Full-time” means an average of at least 30 hours of service a week ^[8].
Part-timers count too, for this test only: add up their monthly hours and divide by 120 ^[9].

For 2027 the two penalty amounts are already set. Rev. Proc. 2026-22, released in May, puts them at $3,780 and $5,670 a year ^[3]. The first applies when a large employer doesn’t offer coverage to its full-time employees and at least one of them gets a premium tax credit on the marketplace ^[8]. It’s figured on full-time headcount minus 30 ^[9]. The second applies per full-time employee who gets a premium tax credit even though the employer offered coverage, which is what happens when the offer isn’t affordable ^{[3, 4]}. The second can’t exceed what the first would have been ^[9].

Does this apply to you? Three hypotheticals

Hypothetical one: a 60-person landscaping company. Say a hypothetical landscaping company had 60 full-time employees on average last year. It’s a large employer ^[8]. If it offered no coverage in 2027 and one crew member got a marketplace credit, the penalty would be figured on 30 employees (60 minus 30), or $113,400 for the year at the $3,780 rate (my arithmetic) ^{[3, 9]}. Now say it does offer a plan, and uses the poverty-line safe harbor, one of three ways the IRS lets employers test affordability without knowing each worker’s household income ^[5]. EY puts the 2027 ceiling under that safe harbor at $135.93 a month for employee-only coverage in the 48 contiguous states and D.C. ^[5]. Keep the employee share at or below that and the offer counts as affordable.

Hypothetical two: a 12-person bakery. Say a hypothetical bakery has 12 employees, none of whom push the full-time-equivalent count anywhere near 50. It isn’t a large employer, so Section 4980H doesn’t apply to it at all ^{[8, 9]}. The 10.22 percent figure still matters, though. If the bakery offers a plan whose employee share is affordable under that test, the workers who take or decline it generally can’t get a premium tax credit instead ^[1]. If the share is above the line, a worker may be able to shop the marketplace with a credit, and the bakery owes nothing for it.

Hypothetical three: a freelance designer. Say a hypothetical single freelance graphic designer expects $55,000 of household income in 2027. Against the $15,960 single-person poverty guideline HHS published in January, that’s about 345 percent of the poverty line ^[6]. That lands in the top band, so the expected contribution toward a benchmark plan is 10.22 percent of income, about $5,621 a year, or roughly $468 a month (my arithmetic) ^[1]. At this year’s 9.96 percent, the same income would mean about $5,478 ^[2]. That’s $143 more for the year.

If the designer’s income instead crossed 400 percent of the poverty line, $63,840 for one person on those guidelines, the 2027 table offers no band at all ^{[1, 6]}. The temporary rule that let households over 400 percent qualify was extended in 2022 only through the end of 2025 ^[7]. Congress, in its wisdom, has made the most important number for a freelancer’s health budget depend on the exact dollar amount of next year’s income.

What to do before open enrollment

If you’re a large employer, the job right now is to price 2027 employee contributions against 10.22 percent before you lock rates with your carrier. EBIA’s comment on the guidance says the same thing: large employers and their advisers should check 2027 contribution amounts against the new figure ^[4]. Watch your plan year. A plan year that begins November 1, 2026 still runs on 9.96 percent, because it begins in 2026; the 10.22 percent figure only reaches a plan year beginning in 2027 ^{[1, 2]}.

If you’re near 50 employees, run the count with the part-timer formula, not just your full-time roster ^[9]. That decides whether any of the penalty math applies.

If you’re self-employed and buy your own coverage, the useful move is a careful 2027 income estimate. The table works in bands, and the cliff at 400 percent is real under the version the IRS published ^{[1, 7]}. When you’re unsure, ask your preparer how timing income or retirement contributions could affect where you land.

What I’m keeping an eye on

Whether Congress touches the premium tax credit before 2027 coverage starts. The table in Rev. Proc. 2026-26 is built on the original structure of the law, ending at 400 percent of the poverty line ^{[1, 7]}. Any change from Congress would mean new numbers for freelancers and anyone else buying their own coverage.

The Internal Revenue Bulletin version. Rev. Proc. 2026-26 was posted July 21 and is effective for taxable years and plan years beginning in 2027 ^[1]. I’ll check the bulletin version against these figures.

— Sally