On Sept. 6, 2024, the IRS released the affordability percentage threshold for 2025 plan years under the Affordable Care Act’s(ACA) pay-or-play rules. These rules require ALEs to offer affordable, minimum-value health coverage to their full-time employees (and dependents) or risk paying a penalty.
For plan years beginning in 2025, employer-sponsored coverage will be considered affordable under the ACA’s pay-or-play rules if the employee’s required contribution for self-only coverage does not exceed 9.02% of their household income for the year. This is an increase from the affordability percentage for 2024 plan years (8.39%). Due to this increase, applicable large employers (ALEs) may have more flexibility when setting employee contribution levels for the 2025 plan year.
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