Why Did the 2027 ACA Affordability Percentage Jump to 10.22%?

Short answer: the IRS just set the 2027 ACA "affordability percentage" at 10.22%, the highest it has ever been. This one number does two jobs at once: it caps what someone earning 300%–400% of the Federal Poverty Level (FPL) has to pay for a benchmark Marketplace plan before premium tax credits kick in, and it sets the bar employers must clear for their coverage to count as "affordable" under the employer mandate. Because the number went up so much this year, plan on more questions from clients about why their subsidy looks different for 2027.

Where this comes from

On July 21, 2026 the IRS released Revenue Procedure 2026-26, the annual notice that updates two numbers tied to Section 36B of the tax code:

• The Applicable Percentage Table - the sliding scale used to calculate an individual's premium tax credit (PTC) based on household income as a percentage of the FPL.
• The Required Contribution Percentage - the affordability threshold employers use to test whether the health coverage they offer is "affordable" under the ACA's employer mandate.

For 2027, both numbers land at the same figure: 10.22%.

Why 10.22% is a big jump

This percentage moves a little most years, but it usually drifts. Here is the full run of history:

The jump is real, and it comes from a methodology change, not a one-time fluke. This percentage is indexed every year to how fast health insurance premiums are growing compared to how fast incomes are growing. Through 2025, the "premium growth" side of that comparison only counted employer-sponsored insurance. Starting with the 2026 HHS Marketplace Integrity and Affordability rule, HHS changed the formula to also factor in individual-market premium growth - and individual-market premiums have been rising faster than employer premiums lately. For 2027, the IRS used that same updated formula, which is the main reason the percentage jumped from 9.96% to 10.22% instead of drifting like it usually does.

What it means for a client's premium tax credit

The Applicable Percentage Table is what actually determines a household's expected contribution toward the benchmark (second-lowest-cost Silver) plan. Here is the full 2027 table:

In plain terms: the higher these percentages go, the more a household is expected to pay out of pocket before the tax credit covers the rest - so a higher table generally means a smaller premium tax credit at every income level compared to a year with lower percentages. A client near the top of a bracket, say 245% of FPL, will see their expected contribution calculated at close to 8.66% of income instead of a lower number, which can noticeably shrink their monthly credit versus 2026.

One more wrinkle worth knowing: the ACA has a built-in "failsafe" that would normally require an extra add-on adjustment to these percentages once total federal PTC spending crosses certain thresholds. The IRS and Treasury determined that add-on does not apply for 2027 - so 10.22% is the whole story, not a floor that gets pushed even higher.

What it means for employer-sponsored coverage

Separately, 10.22% is now also the Required Contribution Percentage for plan years beginning in 2027. This is the number employers (and their employees) use to test whether employer-sponsored coverage counts as "affordable":

• If an employee's required contribution for the lowest-cost, self-only plan an employer offers is 10.22% or less of their household income, that coverage is considered affordable - and the employee is generally not eligible for a Marketplace premium tax credit, even if they decline the employer plan and buy on the Marketplace instead.
• Because 10.22% is higher than 2026's 9.96%, an employer plan that just barely failed the affordability test in 2026 could pass it in 2027 without the employer changing anything - which can knock some employees who were counting on a subsidy out of PTC eligibility.

This is the number worth flagging to any client who is comparing "should I take my employer's plan or shop the Marketplace" - the answer can flip year to year purely because this percentage moved, with no change on the employer's end at all.

Still not sure how this affects a specific client?

Affordability calculations are one of the more common places PTC estimates go wrong, especially for households sitting near a bracket line or an employee weighing employer coverage against the Marketplace. Call us at (312) 726-6565 or email help@ihealthagents.com and we will run the numbers with you before anything is submitted.

This article summarizes IRS Revenue Procedure 2026-26 (issued July 21, 2026) for taxable years and plan years beginning in calendar year 2027, and is general educational information, not tax or legal advice. Clients with questions about how this affects a specific tax return should speak with a tax professional.