2020 ACA Affordability Percentage
The 2020 ACA Affordability Percentage is 9.78%.
Effective 2020-01-01Source: Rev. Proc. 2019-29 (IRS)Verified 2026-08-30
Required contribution percentageSource: Publication 974 (2020), Premium Tax Credit (PTC) (IRS)Verified 2026-08-30
Compared with 2019
| Item | 2019 | 2020 | Change |
|---|---|---|---|
| Required contribution percentage | 9.86% | 9.78% | -0.08% (-0.8%) |
Who it applies to
Employers offering minimum essential coverage and employees determining whether they may qualify for a premium tax credit under the Affordable Care Act
What changed this year, and why
For plan years beginning after calendar year 2019, the IRS set the ACA required contribution percentage at 9.78 percent. This percentage is used to determine whether employer-sponsored minimum essential coverage is considered affordable for an individual under section 36B of the Internal Revenue Code.
Common questions
- What does the required contribution percentage determine?
- The required contribution percentage is the threshold set by the IRS under the Affordable Care Act (section 36B) that determines whether employer-sponsored health coverage is considered affordable. If an employee's required contribution for self-only coverage exceeds this percentage of their household income, the coverage is deemed unaffordable and the employee may be eligible for a premium tax credit.
- When does the 9.78% rate take effect?
- It applies to plan years beginning after calendar year 2019, meaning it is used for 2020 plan years.
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 2020, an employer health plan is considered affordable if the employee's share of the annual premium for self-only coverage does not exceed 9.78% of the tax family's household income. This threshold is called the required contribution percentage. The calculation uses self-only coverage costs even if the employee actually enrolls in family coverage that includes a spouse or dependents. If the employee's required contribution is 9.78% or less of household income, the offer is affordable for the employee and all family members. If it exceeds that percentage, the offer is unaffordable and the employee and family members may qualify for the premium tax credit when they enroll in a qualified health plan through the Marketplace.
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 9.78% of your tax family’s household income for 2020.
Publication 974 (2020), Premium Tax Credit (PTC) (IRS)
An affordable offer blocks the premium tax credit
Even if an employer offers coverage that qualifies as minimum essential coverage, the employee is not considered eligible for that employer-sponsored plan - and remains eligible for the premium tax credit - unless the coverage is both affordable and provides minimum value. Both conditions must be met. If either affordability or minimum value is not satisfied, the employee and their tax family members can still claim the premium tax credit for coverage purchased in a qualified health plan. However, if the employee or a family member actually enrolls in the employer coverage that qualifies as minimum essential coverage, that enrolled individual cannot get the premium tax credit, even if the employer coverage fails the affordability or minimum value tests.
Affordability and minimum value. Even if you had the opportunity to enroll in coverage offered by your em- ployer that qualifies as MEC, you are considered eligible for an employer-sponsored plan (and cannot get the PTC for your coverage in a qualified health plan) only if the em- ployer-sponsored coverage is affordable (defined later) and the coverage provides minimum value (defined later).
Publication 974 (2020), Premium Tax Credit (PTC) (IRS)
The second test an employer plan has to fail
An employer-sponsored plan provides minimum value only if it 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 is the key test: if the plan pays less than that share of allowed costs, it fails minimum value. This calculation is based on actuarial principles using benefits for a standard population, not on what the employee actually pays out of pocket. If the plan fails this minimum value test and also fails the affordability test, the employee and family members can qualify for the premium tax credit for coverage purchased in a qualified health plan. Both affordability and minimum value must be satisfied for an employer offer to block the premium tax credit.
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.
Publication 974 (2020), Premium Tax Credit (PTC) (IRS)
A waiting period is not coverage you can use
During a waiting period before employer coverage becomes effective, an employee is not considered eligible for that employer coverage and can qualify for the premium tax credit for coverage in a qualified health plan. A waiting period is the time between an employee's start date and the date when health benefits actually begin. However, if the employee could have enrolled in employer coverage that is minimum essential coverage, affordable, and provides minimum value during an enrollment period but chose not to enroll, the employee cannot get the premium tax credit for the remainder of that plan year. The waiting period exception only applies when the employee genuinely cannot receive benefits under the employer plan.
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).
Publication 974 (2020), Premium Tax Credit (PTC) (IRS)
Which plans are eligible employer-sponsored coverage
An eligible employer-sponsored plan is employer-sponsored coverage that qualifies as minimum essential coverage. This includes health insurance offered in the group market, self-insured group health plans for employees, coverage under certain expatriate health plans, and the Nonappropriated Fund Health Benefits Program of the Department of Defense. These employer-sponsored plans may also include retiree or COBRA coverage. Employer-sponsored health coverage limited to excepted benefits - such as stand-alone vision or dental plans, workers' compensation, or disease-specific coverage - does not qualify as minimum essential coverage and therefore is not an eligible employer-sponsored plan for purposes of the premium tax credit rules.
Employer-sponsored plans that are MEC are also refer- red to as “eligible employer-sponsored plans.”
Publication 974 (2020), 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 (2020), 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 9.78% 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.