The Internal Revenue Service (IRS) has announced the 2026 inflation adjustment for determining the affordability of employer-provided Affordable Care Act (ACA) health insurance. For 2026, the affordability standard will be 9.96 percent of a worker’s compensation. Failure to adhere to the affordability standard results in a “shared responsibility” penalty imposed on employers.

Per the ACA, the amount that applicable large employers (ALEs) can require employees to contribute to affordable employer-sponsored minimum essential benefits health insurance cannot exceed a specified and inflation-adjusted percentage of a worker’s compensation. For 2026, the inflation-adjusted affordability amount can be no more than 9.96 percent of the worker’s compensation An ALE is a company with 50 or more full-time equivalent employees (FTEs).

The 2026 9.96 percent standard is an increase from 2025’s 9.02 percent standard, and the 2024 8.39 percent standard. The 9.96 percent standard takes effect for plan years beginning January 1, 2026.

The inflation adjustment is contained in Rev. Proc. 2025-25. It is posted at https://www.irs.gov/pub/irs-drop/rp-25-25.pdf.

Under the ACA’s shared responsibility rules (the employer mandate), an ALE becomes subject to penalties for failure to offer affordable minimum essential coverage to at least 95 percent of its FTEs. Compliance is measured each month.

Prospects: It is unlikely these employer mandate penalties will change, other than for inflation adjustments, any time soon, if at all.

NAIFA Staff Contact: Mike Hedge – Senior Director – Government Relations, at mhedge@naifa.org