Sep 10, 2024
IRS Releases 2025 ACA Affordability Percentage
On September 6, 2024, the Internal Revenue Service (IRS) released Rev Proc. 2024-35 announcing the Affordable Care Act (ACA) affordability percentage threshold for plan years beginning January 1, 2025.
This percentage is adjusted every year for inflation. For plan years beginning January 1, 2025, the affordability percentage has increased to 9.02% (is currently 8.39% for 2024).
The table below provides the ACA affordability percentages over the past few years.
| Year | Affordability Percentage |
|---|---|
| 2021 | 9.83% |
| 2022 | 9.61% |
| 2023 | 9.12% |
| 2024 | 8.39% |
| 2025 | 9.02% |
For Non-Calendar Year Plans
The ACA affordability percentage is effective on a ‘plan year basis’. This means that non-calendar year plans with plan years prior to January 1, 2025 will continue to use the 2024 affordability percentage of 8.39% until their new plan year begins in 2025.
ACA Employer Shared Responsibility Penalties
Below compares the 2024 and 2025 ACA Employer Shared Responsibility penalties.
| ACA Penalties | 2025 | 2024 | Notes |
|---|---|---|---|
| A Penalties (4980H(a) | $2,900 ($241.67/month) | $2,970 ($247.50/month) | This penalty is applied if the applicable large employer (ALE) fails to offer group health plan coverage to at least 95% of full-time employees (and their children up to age 26) for any month during the year and at least one employee happens to enroll in Exchange coverage with a premium tax credit. |
| B Penalties (4980H(b) | $4,350 ($362.50/month) | $4,460 ($371.67/month) | This penalty is applied if the applicable large employer (ALE) fails to offer affordable, minimum value group health plan coverage to a full-time employee who happens to enroll in Exchange coverage with a premium tax credit. |
More Information
A Guide to 4980H Requirements and Penalties
ACA Affordability Considerations
While every effort has been taken in compiling this information to ensure that its contents are totally accurate, neither the publisher nor the author can accept liability for any inaccuracies or changed circumstances of any information herein or for the consequences of any reliance placed upon it. This publication is distributed on the understanding that the publisher is not engaged in rendering legal, accounting, or other professional advice or services. Readers should always seek professional advice before entering into any commitments.
