Each year, the U.S. Department of Health and Human Services updates the Federal PovertyLevel (FPL). These figures play an important role in Affordable Care Act compliance. Applicable Large Employers (ALEs)—those with 50 or more full-time or full-time equivalent employees—must make sure that their lowest-cost, self-only health plan meets ACA affordability requirements to avoid potentialEmployer Shared Responsibility Penalties (ESRP).
New FPL guidelines released by U.S. Department of Health and Human Services are effective January 13, 2026, and increase the FPL amounts across all regions. Employers should begin reviewing how these updates affect affordability testing and Employer Shared Responsibility considerations.
Why the FPL Matters Under the ACA
Employers may rely on the Federal Poverty Level Safe Harbor to determine whether their lowest-cost, self-only minimum essential coverage that provides minimum value is affordable. Because employers typically do not know employees’ household income, the IRS allows use of this safe harbor as a proxy. Other safe harbors include a W-2 safe harbor and rate of pay safe harbor.
2026 Federal Poverty Level Amounts
For 2026, the FPL amounts for a household of one are:
When applying the FPL Safe Harbor, employers use the FPL for the state where the employee works.
Updated Affordability Percentage for 2026
The ACA affordability percentage is adjusted annually. For the 2026 plan year, the affordability threshold increased significantly to 9.96 percent of house hold income, up from 9.02 percent for the 2025 plan year.
Importantly, the affordability percentage applies on a plan-year basis, not a calendar-year basis. This distinction matters for non-calendar-year plans.
2026 FPL Safe Harbor Monthly Contribution Limits
Non-calendar-Year Plans Beginning in 2026
Non-calendar-year plans that begin in 2026 may use the updated 2026 FPL amounts. Based on the9.96 percent affordability threshold, the maximum monthly employee contribution for the lowest-cost, self-only plan is:
These amounts are calculated as 9.96 percent of the applicable FPL divided by 12.
Calendar-Year Plans Beginning January 1, 2026
Calendar-year plans beginning January 1, 2026 must use the 2025 FPL amounts because the updated FPL was not in effect within six months before the start of the plan year. As a result, the maximum monthly contributions are lower:
Special Timing Rule for Non-calendar-Year Plans
Non-calendar-year plans may use the FPL in effect within six months before the first day of the plan year. For plan years beginning later in 2026, this allows employers to rely on the higher 2026 FPL amounts, which results in higher permitted employee contribution limits under the safe harbor.
By contrast, non-calendar-year plans that began in 2025 must continue using the 9.02 percent affordability percentage until their new plan year starts.
For reference, the monthly FPL Safe Harbor limits for non-calendar-year plans beginning in 2025 remain:
What Employers Should Do Now
Employers should review their plan year start dates and confirm which FPL amounts and affordability percentage apply. Calendar-year plans will continue using 2025FPL figures for 2026 affordability testing, while non-calendar-year plans beginning in 2026 can take advantage of the updated thresholds.
This is also a good time to confirm that at least one self-only plan option remains affordable under the FPL Safe Harbor.
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This article is for informational purposes only and is not intended as legal, tax, or benefits advice. Readers should not rely on this information for taking (or not taking) any action relating to employment, compliance, or benefits. Always consult with a qualified professional before making decisions based on this content.