The IRS released its annual inflation adjustment to the percentage of household income used to determine whether an employer’s offer of health care coverage under the Affordable Care Act (ACA) is affordable [Rev. Proc. 2025-25, 7-18-25].
For plan years beginning in 2026, the percentage of household income increases to 9.96%. The household income percentage for plans beginning in 2025 was 9.02%.
Household Income and Affordability
The ACA’s employer mandate requires applicable large employers to offer minimum essential coverage (MEC) that provides minimum value and is affordable to all of its full-time employees. Affordability is determined as a certain percentage of an employee’s household income. Using the adjusted percentage for 2026, if the required employee premium contribution does not exceed 9.96% of the employee’s household income, then the coverage is affordable under the ACA.
To learn more about federal and state laws, regulations, and information to keep your company's payroll operations in compliance, check out Payroll Source Plus!
Jyme Mariani, Esq., is Director of Payroll Information Resources for PayrollOrg.
