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ARTICLE · 06 AUGUST 2026

ACA Affordability Threshold & Employer Shared Responsibility Penalties Increase For 2027

Calfee, Halter & Griswold LLP
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The IRS has announced significant changes to the Affordable Care Act affordability threshold and employer mandate penalties for 2027, raising the affordability percentage from 9.96% to 10.22% and increasing penalty amounts substantially. Employers subject to the ACA employer mandate must evaluate whether their current plan designs comply with these new thresholds to avoid potentially costly penalties. Understanding how these adjustments impact the three safe harbor calculations and penalty exposure is criti

United StatesEmployment and HR
Jason A. Rothman
Jason A. Rothman
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On July 21, 2026, the IRS issued Revenue Procedure 2026-26 announcing that the Affordable Care Act (ACA) affordability threshold is increased from 9.96% in 2026 to 10.22% in 2027. Additionally, on May 4, 2026, the IRS issued Revenue Procedure 2026-22, which provides indexing adjustments for penalties under the ACA employer mandate.

Due to these increases, employers subject to the ACA employer mandate must be aware that the cost for plan participants under its lowest cost, self-only coverage option may have to be adjusted to avoid the possibility of a penalty on the employer. In addition, if subject to the employer mandate penalty amounts, employers face greater penalties in 2027.

The ACA Employer Mandate and ACA Affordability Requirement

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