2025 ACA Affordability Rate

At A Glance

The Affordable Care Act (ACA) affordability rate for employer-sponsored health coverage will increase from 8.39% to 9.02% of an employee’s household income for the 2025 calendar plan year.

What is the Affordability Rate?

Under the ACA, employer-sponsored health coverage will be considered affordable for a 2025 calendar year plan if an employee's required contribution for self-only coverage doesn't exceed 9.02% of the their household income for the taxable year. This is an increase from the 2024 calendar plan year rate of 8.39%. According to IRS Revenue Procedure 2024-35, employer-sponsored health coverage under the ACA will be considered

Calculating Affordability

Because employers generally don't know an employee’s household income, the IRS provides three affordability safe harbors that applicable large employers (ALEs) may use to determine affordability. The safe harbors permit an ALE to measure affordability based on one of the following:

• Form W-2 Wages
• Rate of Pay
• Federal Poverty Level (FPL)

Calculating Affordability Using the FPL Safe Harbor

For most employers, the FPL safe harbor is the easiest to calculate. For 2025 calendar year plans, the FPL safe harbor is satisfied if an employee's required monthly contribution for self-only coverage doesn't exceed 9.02% of the federal poverty line divided by 12.

2025 poverty level guidelines won't be available until the end of January 2025 or later, so IRS guidance allows employers to use the guidelines in effect within six months before the first day of the employer’s plan year. This means an employer with a plan year start date of January 1, 2025, may use the 2024 federal poverty guideline amount to determine their 2025 FPL safe harbor monthly threshold amount.