IRS Announces ACA Numbers Needed for Health Plans in 2026

The IRS has released two revenue procedures, containing info employers need to ensure Affordable Care Act (ACA) compliance next year.

The new numbers are pertinent as employers are researching health insurance plans and gearing up for open enrollment. As in the past, under the ACA, minimum essential coverage must be affordable and must provide minimum value to full-time employees.

Here are the latest details from the IRS for plan years starting in 2026.

Higher Affordability Threshold

First, in Revenue Procedure 2025-25, the IRS revealed the affordability percentage for next year.

It’ll be 9.96% of an employee’s household income. That’s an increase from the current affordability threshold of 9.02%.

Employees may utilize that information if they think they’re eligible for the premium tax credit.

At the same time, employers may need the affordability percentage to show that the employer shared responsibility affordability safe harbors are applicable. Here’s a recap of the three safe harbors available to prove affordability:

• Form W-2 wages — so for example, in 2026, you’d multiply the amount in box 1 by 9.96%
• An employee’s rate of pay, and
• The federal poverty line.

Increased Penalty Amounts

Next, in Revenue Procedure 2025-26, the IRS announced that in 2026, employers will face steeper penalties under the ACA.

The ACA’s employer shared responsibility payment (ESRP) comes into play under two sections of the Internal Revenue Code (IRC).

• IRC Sec. 4980H(a) — the ESRP is currently $2,900 and will be increasing to $3,340.
• IRC Sec. 4980H(b) — the ESRP is currently $4,350 and will be increasing to $5,010.

Typically, employers receive Letter 226 from the IRS, notifying them that they’re liable for an ESRP. However, that may be changing due to a recent lawsuit. In that case, the court said that the certification which employers must receive prior to being assessed an ESRP should come from the Department of Health and Human Services, not the IRS.

Reporting on Form 1095-C

In related news, the IRS released a draft version of Form 1095-C, Employer-Provided Health Insurance Offer and Coverage. The June 2025 draft contains no major changes for 2025. For example, you’ll still use box 16 to report the three safe harbors noted above.

Although employers no longer have to send Form 1095-C to employees — assuming certain circumstances are met — they do still need to submit the form to the IRS.