Affordable Care Act: 2023 “Affordability” Percentage

In Revenue Procedure 2022-34, the IRS significantly decreased the affordability percentage from 9.61% to 9.12% for 2023.


Under §4980H, applicable large employers (50 or more full-time equivalents (FTEs)) must offer coverage to full-time employees that is affordable to avoid potential §4980H(b) penalties.

Coverage is considered “affordable” under §4980H(b) requirements if the employee contribution satisfies at least one of three available safe harbors (i.e., federal poverty level (FPL), rate of pay, or Form W-2).

In addition, individuals enrolling for coverage through a public Exchange will not qualify for subsidized coverage if they are eligible for employer-sponsored group health plan coverage that is affordable.

Coverage is generally considered “affordable” if the employee contribution for employee-only (single) coverage does not exceed a set percentage (9.12% in 2023) of household income.

  • Note – Unless final rules are released this year indicating otherwise, coverage is considered affordable for dependents as well, regardless of the contribution amount, so long as the employee-only (single) coverage is affordable.

Required Contribution Percentage

Originally, for 2014, the required contribution percentage for determining affordability was set at 9.5%. The percentage is adjusted annually. See applicable percentages for several years in the table below, along with the dollar thresholds for single coverage to be FPL affordable those years.

Affordability Percentage      2018 2019 2020 2021 2022 2023
9.56% 9.86% 9.78% 9.83% 9.61% 9.12%
FPL Affordability –Calendar Year Plan     $96.07 $99.75 $101.79 $104.52 $103.14 $103.28
FPL Affordability – Non-Calendar Year Plan      $96.71 $102.62 $103.99 $105.50 $108.83 TBD


For calendar year plans, 9.12% applies beginning in January 2023, but for a non-calendar year plan, 9.12% applies with the plan year beginning in 2023.

The decrease in the affordability percentage (from 9.61% in 2022 to 9.12% in 2023) may require employers to lower employee contributions for the 2023 plan year to meet the affordability requirements under §4980H(b).

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.

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