ACA Affordability Threshold Increases for 2025 Plan Year

On September 6, 2024, the IRS announced, in Revenue Procedure 2024-35, that the Affordable Care Act (ACA) affordability threshold will be 9.02%, increased from 8.39% in 2024, for plan years beginning in calendar year 2025 (after December 31, 2024).

Under the ACA’s employer shared responsibility provision (play or pay), large employers (those with an average of 50 full-time employees—including full-time equivalent employees—during the prior year) must either:

• Offer most full-time employees and their children minimum essential, minimum value coverage that is affordable at the employee-only level of coverage; or
• Make an employer shared responsibility payment to the IRS if at least one of their full-time employees purchases coverage on a health insurance Marketplace and receives a premium tax credit because their employer did not offer qualifying coverage.

Under the new threshold, to be affordable for the 2025 plan year, the employee’s required contribution to the plan cannot be more than 9.02% of their income.

Read more about affordability and minimum value on the IRS’s Questions and Answers on Employer Shared Responsibility Provisions Under the Affordable Care Act web page.