2023 ACA Affordability Percentage
The 2023 ACA Affordability Percentage is 9.12%.
Effective 2023-01-01Source: Rev. Proc. 2022-34 (IRS)Verified 2026-09-02
Required contribution percentageSource: Publication 974 (2023), Premium Tax Credit (PTC) (IRS)Verified 2026-09-02
Compared with 2022
| Item | 2022 | 2023 | Change |
|---|---|---|---|
| Required contribution percentage | 9.61% | 9.12% | -0.49% (-5.1%) |
Who it applies to
Individuals with employer-sponsored health coverage who need to determine whether their coverage is affordable for premium tax credit purposes under IRC § 36B for plan years beginning in 2023.
What changed this year, and why
For plan years beginning in calendar year 2023, the ACA affordability threshold - the Section 36B Required Contribution Percentage - is 9.12%. This percentage, set by Rev. Proc. 2022-34, determines whether employer-sponsored health coverage is considered affordable under IRC § 36B. If an employee's share of the premium for self-only coverage exceeds 9.12% of household income, the coverage is treated as unaffordable and the employee may qualify for a premium tax credit.
Common questions
- What is the affordability percentage used for?
- The required contribution percentage is used under IRC § 36B to determine whether employer-sponsored minimum essential coverage is considered affordable. If an employee's required contribution for self-only coverage exceeds 9.12% of their household income for 2023, the coverage is not affordable and the employee may be eligible for a premium tax credit.
- Does this percentage apply to all plan years?
- No. It applies to plan years beginning in calendar year 2023. The effective date is set by Rev. Proc. 2022-34.
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
The IRS sets an affordability threshold each year. For 2023, employer coverage counts as affordable when the employee's required contribution for self-only coverage is no more than 9.12% of the tax family's household income. The same 9.12% test applies to family coverage for the rest of the tax family: the employee's share of the annual premium for coverage that includes other tax family members must also stay at or below 9.12% of household income. If the offer is affordable for the employee but not for a spouse or child, the employee remains blocked from the premium tax credit, but the unaffordable family members may qualify for the credit if they enroll in a Marketplace plan. The test uses self-only coverage cost for the employee because the law looks at the cheapest way the employee can cover himself or herself, regardless of whether family members actually enroll. An offer that a Marketplace has already judged affordable at enrollment is treated as affordable even if income later changes, so the taxpayer cannot reclaim the credit by showing the true percentage was higher.
How to determine if the plan is affordable. Your em- ployer coverage is generally considered affordable for you 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 9.12% of your tax family’s household income for 2023.
Publication 974 (2023), Premium Tax Credit (PTC) (IRS)
An affordable offer blocks the premium tax credit
An offer of employer-sponsored coverage that qualifies as minimum essential coverage blocks access to a premium tax credit only when it satisfies two additional conditions: the coverage must be affordable and it must provide minimum value. If either condition fails, the offer does not disqualify you from claiming the premium tax credit for coverage in a qualified health plan. For your tax family members, the same two conditions apply to any employer offer made to them individually. However, once you or a family member actually enrolls in the employer coverage that qualifies as minimum essential coverage, the individual enrolled cannot receive the premium tax credit - even if that employer coverage is unaffordable or fails to provide minimum value. Enrollment therefore creates a separate, stricter bar than a mere offer of coverage.
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 (2023), Premium Tax Credit (PTC) (IRS)
The second test an employer plan has to fail
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 also provides substantial coverage of inpatient hospitalization services and physician services. A plan that fails this test does not count as offering meaningful coverage, so the employee and any tax family members who were offered enrollment remain eligible for the premium tax credit through the Marketplace. The 60% share requirement means the plan must bear the majority of expected benefit costs; cost-sharing borne by the employee - deductibles, co-pays, and co-insurance - can account for only a minority share. The minimum-value test works alongside the affordability test: an employer offer blocks the credit only when the plan both meets the affordability threshold and provides minimum value. If either condition is not met, the offer does not prevent the taxpayer from claiming the credit for qualified health plan coverage.
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 (2023), Premium Tax Credit (PTC) (IRS)
A waiting period is not coverage you can use
A waiting period is a stretch of time at the start of employment - or after a life event - before employer coverage becomes effective. During any month when the employee cannot receive benefits under the employer plan, the employee is not considered eligible for employer coverage for premium tax credit purposes. That means the employee can qualify for the credit and enroll in a Marketplace qualified health plan for those months. The same rule covers any other period when the employee has no access to benefits, not only formal waiting periods. However, the rule does not give a permanent pass: if the employee could have enrolled in employer coverage that was minimum essential coverage, affordable, and provided minimum value during an enrollment period and chose not to enroll, the employee cannot claim the credit for the rest of that plan year.
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 (2023), Premium Tax Credit (PTC) (IRS)
Which plans are eligible employer-sponsored coverage
For premium tax credit purposes, the term "eligible employer-sponsored plan" means an employer-sponsored plan that provides minimum essential coverage. Minimum essential coverage includes, among other types, group health plans offered by employers that meet the definition under the Internal Revenue Code, self-insured group health plans for employees, certain expatriate health plans, and the Nonappropriated Fund Health Benefits Program of the Department of Defense. These plans generally extend to retiree or COBRA coverage as well. Coverage limited to excepted benefits - such as stand-alone vision or dental, workers' compensation, or disease-specific policies - does not count as minimum essential coverage, so an offer of only that kind of coverage is not an eligible employer-sponsored plan and does not block access to the premium tax credit.
Employer-sponsored plans that are MEC are also refer- red to as “eligible employer-sponsored plans.”
Publication 974 (2023), Premium Tax Credit (PTC) (IRS)
COBRA or retiree coverage from a former employer only counts against you while you are enrolled in it
Under the Premium Tax Credit rules, if your employment ends and your former employer offers you coverage such as COBRA continuation coverage or retiree health coverage, that offer does not count against your eligibility for the Premium Tax Credit unless you actually enroll in it. You are considered eligible for that former employer's coverage only for the months you are enrolled in it. The same rule applies to someone who can enroll in the coverage because of a relationship to a former employee, such as a spouse or dependent. This means that while you have the option to elect COBRA or retiree coverage after leaving a job, merely being offered that coverage does not disqualify you from receiving the Premium Tax Credit for a Marketplace plan. Only if you choose to enroll in the former employer's coverage does it potentially affect your credit eligibility, and only for those months of enrollment.
Coverage after employment ends. If your employ- ment with an employer ends and you are offered employer coverage by your former employer (for example, COBRA or retiree coverage), you are considered eligible for that employer coverage for PTC purposes only for the months that you are enrolled in the employer coverage. This same rule applies to an individual who may enroll in the cover- age by reason of a relationship to a former employee.
Publication 974 (2023), Premium Tax Credit (PTC) (IRS)
Affordability is judged on your income estimate at enrollment, not what your return later shows
When you enroll in a qualified health plan through the Marketplace, your eligibility for advance payments of the premium tax credit (APTC) is based on the Marketplace's estimate of your household income at that time, not on the actual income you report when you file your tax return. If the Marketplace estimates that your required contribution for employer coverage will be more than 9.12% of your estimated household income and therefore determines you are eligible for APTC, that eligibility stands even if your actual household income on your return turns out to make the employer coverage affordable at 9.12% or less. However, this protection is lost if you did not keep the Marketplace informed of changes in your income or required contribution during each annual re-enrollment period, or if you provided incorrect information to the Marketplace about your required contribution with intentional or reckless disregard for the facts. In those cases, the IRS will treat you as eligible for affordable employer coverage based on the household income shown on your tax return.
Determining affordability at the time of enrollment. 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 9.12% 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. Eligibility for employer coverage in this situation does not disqualify you from taking the PTC when you file your tax return, even if your required contri- bution for coverage was not more than 9.12% of the household income on your return.
Publication 974 (2023), Premium Tax Credit (PTC) (IRS)
There is no line for the percentage itself - it enters your return as a multiplier on a worksheet
For 2023, the required contribution percentage of 9.12% does not appear as a standalone figure on your tax return. Instead, it enters the calculation as a multiplier on Worksheet N, which the IRS uses to determine whether a qualified small employer health reimbursement arrangement (QSEHRA) is considered affordable. On that worksheet, you take the amount from Form 8962, line 3 (the applicable second lowest cost silver plan premium) and multiply it by 0.0912. That product represents the annual amount that would make the QSEHRA affordable. The worksheet then divides that figure by 12.0 to produce a monthly threshold, which is compared against the monthly premium for the second lowest cost silver plan to determine affordability of the QSEHRA arrangement.
Worksheet N. Worksheet To Determine if the QSEHRA Is Considered Affordable Keep for Your Records Note. See Special instructions for Worksheet N if your SLCSP premium was not the same for all months of 2023 or you changed employers during 2023. 1. Enter the amount from Form 8962, line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. 2. Multiply line 1 by 0.0912 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. 3. Enter the number of months you were provided the QSEHRA in 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. 4. Divide line 2 by 12.0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.
Publication 974 (2023), Premium Tax Credit (PTC) (IRS)
Give the Marketplace bad numbers on purpose or carelessly, and the safe harbor does not protect you
The safe harbor that locks in affordability at the time of enrollment does not protect taxpayers who give the Marketplace false or misleading information. If you provide incorrect information to the Marketplace about your required contribution for employer coverage with intentional disregard for the facts (meaning you know the information is inaccurate) or with reckless disregard for the facts (meaning you make little or no effort to determine whether the information is accurate, and your lack of effort is substantially different from what a reasonable person would do), then the exception that would otherwise allow you to claim the PTC despite a change in actual income does not apply. In that situation, you will be treated as eligible for affordable employer coverage based on the household income on your actual tax return, and you may lose eligibility for the premium tax credit.
You provided incorrect information to the Marketplace about your required contribution with intentional or reckless disregard for the facts. You provide information with intentional disregard for the facts if you know that the information provided is inac- curate. You provide information with a reckless disregard for the facts if you make little or no effort to determine whether the information provided is accurate and your lack of effort to provide accurate information is substan- tially different from what a reasonable person would do under the circumstances.
Publication 974 (2023), 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 (2023), 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 9.12% 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.