Article
5 min read
How to Prepare for 2026 ACA Affordability Changes
PEO
US payroll
Author
Shannon Ongaro
Last Update
July 25, 2025
The IRS has announced key adjustments to Affordable Care Act (ACA) affordability calculations for the 2026 plan year, as detailed in Revenue Procedure 2025-25. These adjustments directly impact how eligibility for premium tax credits and affordability of employer-sponsored health coverage will be determined.
What's changing in 2026?
Starting in calendar year 2026, the IRS will adjust the Applicable Percentage Table and Required Contribution Percentage using a new premium growth measure. The Required Contribution Percentage will be set at 9.96%.
Historically, these figures relied exclusively on premium growth rates for employer-sponsored insurance. However, the Department of Health and Human Services (HHS) introduced an updated methodology in its 2026 Marketplace Integrity and Affordability rule (90 Fed. Reg. 27074), expanding to include growth in individual market premiums.
This methodological change aims to provide a more accurate reflection of actual premium increases experienced across different markets, potentially offering a more precise alignment with market realities for taxpayers.
Updated applicable percentage table for 2026
The Applicable Percentage Table, essential for calculating premium tax credits under IRS Code § 36B(b)(3)(A)(i), is adjusted for taxable years beginning in 2026 as follows:
| Household Income (% of Federal Poverty Line) | Initial Percentage | Final Percentage |
|---|---|---|
| Less than 133% | 2.10% | 2.10% |
| At least 133% but less than 150% | 3.14% | 4.19% |
| At least 150% but less than 200% | 4.19% | 6.60% |
| At least 200% but less than 250% | 6.60% | 8.44% |
| At least 250% but less than 300% | 8.44% | 9.96% |
| At least 300% but not more than 400% | 9.96% | 9.96% |
These percentages determine the maximum share of household income individuals are expected to contribute toward health insurance premiums when calculating their eligibility for ACA premium tax credits.
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Required contribution percentage
Additionally, for plan years starting in 2026, the Required Contribution Percentage—used to assess the affordability of employer-sponsored health coverage under § 36B(c)(2)(C)(i)(II)—will be set at 9.96**%**.
This percentage defines the maximum portion of household income employees can be required to pay for employer-sponsored minimum essential coverage before it is considered "unaffordable," potentially qualifying them for marketplace subsidies.
Why the change?
The Treasury and IRS determined this adjustment necessary to align affordability assessments more closely with evolving premium trends across both employer-sponsored and individual insurance markets. This ensures the ACA continues meeting its goal of affordability and accurate subsidy determination.
This change, effective for taxable and plan years starting in 2026, supplements Rev. Proc. 2014-37 and marks an important shift in ACA compliance strategies for employers and insurers alike.
How employers can prepare for the 2026 ACA affordability changes
With the ACA affordability rate shifting in 2026, proactive planning is key. Here’s how you can prepare:
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Review current coverage: Ensure your employer-sponsored health plans can meet the updated Required Contribution Percentage of 9.96%
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Update your payroll systems: Adjust payroll processes to reflect the new Applicable Percentage Table, especially if you have employees whose incomes range from 133% to 400% of the federal poverty line
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Communicate clearly: Notify employees of potential changes to their health coverage costs early, avoiding confusion down the road
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Leverage Deel for simplified compliance: Deel PEO and Deel US Payroll automatically incorporate ACA updates, meaning fewer manual adjustments and lower compliance risk for you
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Stay on top of regulatory changes with Deel
Keeping up with annual ACA affordability rate changes—like the ones rolling out in 2026—can be tricky.
Deel makes it simple.
Whether you're using Deel PEO or Deel US Payroll, our built-in compliance features automatically track updates, so you don't have to. This includes:
- Monthly Workforce Insights: Proactively sends you insights about your workforce, and alerts you to expiring visas, misclassification risks, and other non-compliance with elements
- Compliance Monitor: Automatically scans, collects, and explains the latest relevant regulatory changes globally
- Worker Classifier: Uses award-winning research into localized employment court cases and classification tests to classify your workers with over 90% accuracy
- Knowledge Hub: In-platform global hiring and payroll resource that provides curated country guides and compliance updates
Less stress about regulations means more time to grow your business confidently, knowing compliance is handled. To learn more about Deel, book a 30-minute call with a specialist.
Disclaimer: This article is informational and should not be considered tax advice.
About the author
Shannon Ongaro is a content marketing manager and trained journalist with over a decade of experience producing content that supports franchisees, small businesses, and global enterprises. Over the years, she’s covered topics such as payroll, HR tech, workplace culture, and more. At Deel, Shannon specializes in thought leadership and global payroll content.
