2027 LARGE EMPLOYER CHANGES
CHANGES COMING
ACA Compliance Update for 2027: Affordability Percentage + What Counts as an Applicable Large Employer
2027 ACA Affordability Percentage (Pay-or-Play Rules)
For plan years beginning in 2027, the IRS affordability percentage increases to 10.22%. Employer-sponsored coverage is generally considered “affordable” if a full-time employee’s required contribution for self-only coverage under the lowest-cost plan option that provides minimum value does not exceed 10.22% of the employee’s household income (often measured using an IRS affordability safe harbor).
An Applicable Large Employer (ALE) is an employer that averaged 50 or more full-time employees (including full-time equivalent employees) during the prior calendar year.
What counts toward the 50+
- Full-time employee: generally averages 30+ hours per week (or 130+ hours per month).
- Full-time equivalents (FTEs): a conversion of part-time hours into a full-time headcount number for ALE determination.
High-level FTE concept: FT employees+FTEs (from part-time hours)=Total headcount for ALE statusFT employees+FTEs (from part-time hours)=Total headcount for ALE status
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