2016 ACA Affordability Percentage
The 2016 ACA Affordability Percentage is 9.66%.
Effective 2016-01-01Source: Rev. Proc. 2014-62 (IRS)Verified 2026-08-30
Required contribution percentageSource: Publication 974 (2016), Premium Tax Credit (PTC) (IRS)Verified 2026-08-30
Who it applies to
Employers offering minimum essential coverage and employees determining eligibility for the premium tax credit under § 36B of the Internal Revenue Code, for plan years beginning after December 31, 2015.
What changed this year, and why
For plan years beginning after December 31, 2015, the ACA required contribution percentage under § 36B is 9.66%. This percentage is used to determine whether employer-sponsored minimum essential coverage is affordable for purposes of the premium tax credit under § 36B. If an employee's required contribution for self-only coverage exceeds 9.66% of household income, the coverage is not considered affordable, and the employee may be eligible for a premium tax credit through a Health Insurance Marketplace.
Common questions
- What is the ACA affordability percentage for 2016?
- For plan years beginning after December 31, 2015, the required contribution percentage under § 36B is 9.66%.
- What does this percentage determine?
- It determines whether employer-sponsored minimum essential coverage is considered affordable. If an employee's share of the premium for self-only coverage exceeds 9.66% of household income, the coverage is unaffordable and the employee may qualify for a premium tax credit through a Marketplace.
Every amount on this page is a published figure rather than yours. The Affordable employer coverage calculator takes the number you enter and works it out against them, showing which published figure it used.
The share of household income that makes an offer affordable
For 2016, an employer-sponsored health plan is considered affordable if the employee's share of the annual cost for self-only coverage does not exceed 9.66% of the tax family's household income. This calculation uses the cost of self-only coverage even when the employee would actually enroll in family coverage that includes a spouse or dependents. The employee required contribution is the key figure in this test. If the employee's cost for self-only coverage is 9.66% or less of household income, the offer of coverage is deemed affordable for the employee and all family members, regardless of how much family coverage would actually cost. This affordability threshold is set annually by the IRS. For 2017, the threshold increases to 9.69%. There is an exception: employer coverage is not considered affordable if the employee provided accurate information about employer coverage availability to the Marketplace and the Marketplace determined the employee was eligible for advance premium tax credits for coverage in a qualified health plan.
How to determine if the plan is affordable. Your em- ployer coverage is generally considered affordable for you and for a family member if your share of the annual cost for self-only coverage, which is sometimes referred to as the employee required contribution, is not more than 9.66% of your tax family’s household income for 2016. For 2017, this threshold will increase to 9.69%. Self-only cov- erage is used for this calculation even if you have a spouse or dependents and therefore would enroll in cov- erage that is not self-only coverage (for example, family coverage).
Publication 974 (2016), Premium Tax Credit (PTC) (IRS)
An affordable offer blocks the premium tax credit
Even if an employer offers health coverage, the offer does not block a worker from receiving the premium tax credit for a qualified health plan unless the employer-sponsored coverage is both affordable and provides minimum value. If the coverage fails either test - meaning it costs too much relative to household income or does not pay a sufficient share of allowed benefit costs - the worker is treated as not eligible for the employer plan and may qualify for the premium tax credit. The same rule applies to the worker's tax family members: they also cannot get the credit only if the coverage was affordable and provided minimum value for the employee. However, if the worker or a family member actually enrolls in the employer coverage, that individual cannot get the premium tax credit for a qualified health plan, even if the employer coverage is not affordable or does not provide minimum value. Both conditions must be met to block the credit.
Affordability and minimum value. Even if you had the opportunity to enroll in coverage offered by your em- ployer, you are considered eligible for an employer-spon- sored plan (and cannot get the PTC for your coverage in a qualified health plan) only if the employer-sponsored coverage is affordable (defined later) and the coverage provides minimum value (defined later).
Publication 974 (2016), Premium Tax Credit (PTC) (IRS)
The second test an employer plan has to fail
An employer-sponsored health plan provides minimum value only if the plan pays at least 60% of the total allowed costs of benefits for a standard population and provides substantial coverage of inpatient hospitalization services and physician services. The 60% threshold means that the employee's expected cost-sharing - including deductibles, co-pays, and co-insurance - must be no more than 40% of the cost of the benefits. This percentage is calculated using actuarial principles based on benefits provided to a standard population, not on what any particular employee actually pays in cost-sharing. The minimum value test is the second requirement, alongside affordability, that an employer plan must satisfy to block an employee's access to the premium tax credit. If the plan fails this test, the employee is treated as not eligible for employer coverage and may qualify for premium tax credits for a qualified health plan.
How to determine if a plan provides minimum value. An employer-sponsored plan provides minimum value only if the plan pays at least 60% of the total allowed costs of benefits for a standard population and provides sub- stantial coverage of inpatient hospitalization services and physician services. A plan meets the 60% rule only if an employee’s expected cost-sharing (deductibles, co-pays, and co-insurance) under the plan is no more than 40% of the cost of the benefits.
Publication 974 (2016), Premium Tax Credit (PTC) (IRS)
A waiting period is not coverage you can use
During a waiting period before employer health coverage becomes effective, an employee is not considered eligible for employer coverage and may qualify for the premium tax credit for a qualified health plan if otherwise eligible. The waiting period is a month when the employee cannot receive benefits under the employer plan, so it does not count as having an offer of employer coverage. However, this rule has an important limit: if the employee could have enrolled in employer coverage that is affordable and provides minimum value but chose not to enroll during an enrollment period, the employee cannot get the premium tax credit for the period when enrollment was possible. The waiting period exception applies only to time when the employee genuinely has no access to benefits, not to periods when affordable, minimum-value coverage was available but declined.
Waiting periods and other periods without access to benefits. You are not considered eligible for employer coverage, and can get the PTC for your coverage in a qualified health plan if you are otherwise eligible, for a month when you cannot receive benefits under the em- ployer coverage (for example, you are in a waiting period before the employer coverage becomes effective). How- ever, if you could have enrolled in employer coverage that is affordable and provides minimum value and you did not enroll during an enrollment period, you cannot get the PTC for your coverage in a qualified health plan for the pe- riod you could have been enrolled in the employer cover- age.
Publication 974 (2016), Premium Tax Credit (PTC) (IRS)
Which plans are eligible employer-sponsored coverage
An eligible employer-sponsored plan is an employer-sponsored plan that provides minimum essential coverage. These plans include health insurance offered by an employer to employees, self-insured group health plans for employees, and coverage under certain expatriate health plans. A grandfathered health plan offered in a group market also qualifies. In general, these employer-sponsored plans may include post-employment or continuation coverage such as COBRA. Employer-sponsored health coverage that is limited to excepted benefits - such as stand-alone vision or dental plans, workers' compensation coverage, or coverage limited to a specified disease or illness - does not count as minimum essential coverage and therefore is not an eligible employer-sponsored plan. Only plans that meet the minimum essential coverage requirement block access to premium tax credits.
Employer-sponsored plans that are MEC are also refer- red to as eligible employer-sponsored plans.
Publication 974 (2016), Premium Tax Credit (PTC) (IRS)
How each figure was verified
Each number below was read from a stored copy of the document named beside it, and checked to occur word for word in the quoted sentence. The digest is of that stored text.
Publication 974 (2016), Premium Tax Credit (PTC) (IRS)
- Required contribution percentage
Your employer coverage is not considered affordable, if, when you enroll in a qualified health plan, the Marketplace determines that your required contribution for employer coverage will be more than 9.66% of what the Market- place estimates will be your household income and there- fore that you are eligible for APTC for coverage in the qualified health plan.