The IRS recently announced that the 2027 Affordable Care Act (ACA) affordability percentage will increase to 10.22%, the highest affordability percentage since the ACA was implemented.

While this announcement may not make national headlines, it has real implications for individuals, families, employers, and anyone purchasing health insurance through the Marketplace.

If you’ve ever wondered why your Marketplace subsidy changed, whether your employer coverage is considered affordable, or why health insurance premiums continue to consume a larger portion of household budgets, this update matters.

What Is the ACA Affordability Percentage?

The affordability percentage is an IRS benchmark used to determine whether health insurance is considered “affordable” based on your household’s Modified Adjusted Gross Income (MAGI).

For 2027, that percentage is 10.22%.

This percentage is used in two important ways:

• To calculate Marketplace premium tax credits (financial assistance) for eligible individuals and families.
• To determine whether an employer-sponsored health plan meets the IRS affordability requirements.

What the 10.22% Affordability Percentage Does NOT Mean

One of the biggest misconceptions is that everyone will automatically be offered health insurance costing less than 10.22% of their household income.

That is not how the rule works.

If You Buy Health Insurance Through the Marketplace

The affordability percentage helps determine the amount of premium tax credit available if you qualify for financial assistance.

If your income is too high to qualify for subsidies, you may pay the full premium, which could be substantially more than 10.22% of your household income.

If You Have Employer Coverage

The affordability percentage is used to determine whether the employee’s required contribution for self-only coverage is considered affordable under IRS rules.

It does not guarantee what your family’s total premium will be.

A Real-World Example

A household earning $100,000 per year could be expected to contribute more than $10,000 annually toward health insurance premiums before coverage is considered “unaffordable” under this benchmark.

And remember…

That’s just the premium.

It doesn’t include:

• Deductibles
• Copays
• Coinsurance
• Prescription drug costs
• Other out-of-pocket medical expenses

For many families, healthcare costs extend far beyond the monthly premium.

Why This Matters More Than Ever

I’ve been helping individuals, families, and employers navigate health insurance since 2007.

These conversations are becoming more difficult every year.

Families are struggling to fit health insurance into their monthly budgets.

Employers are working to continue offering quality benefits while managing rising healthcare costs.

Unfortunately, those two challenges often go hand in hand.

My Family Faced This Decision Too

This isn’t just something I discuss with clients.

It’s something my own family experienced.

When I compared our options earlier this year, remaining on a Marketplace Bronze plan was projected to cost our family of four approximately $24,000 per year in premiums alone.

That prompted us to evaluate other health insurance options that better fit our family’s needs.

Those alternatives are not appropriate for everyone.

Many require medical underwriting, meaning applicants must qualify based on their health history.

However, for healthy individuals who qualify, there may be additional options worth exploring.

Don’t Wait Until Open Enrollment

If you’re already wondering how you’ll afford health insurance in 2027, now is the time to begin planning.

This is especially true if:

• Your household income is close to the Marketplace subsidy eligibility thresholds.
• You’re self-employed.
• You’re planning to retire before Medicare.
• You’re expecting a large capital gain, Roth conversion, bonus, or other income change.
• You’re concerned about losing Marketplace financial assistance.
• You’re trying to decide whether employer coverage or Marketplace coverage makes more financial sense.

Small changes in household income can significantly affect Marketplace financial assistance.

Planning before Open Enrollment often provides more flexibility than waiting until enrollment season begins.

Alternative Health Insurance Options May Be Available

Depending on your situation, we may discuss:

• Marketplace health insurance
• Income planning strategies (in coordination with your tax professional)
• Employer-sponsored coverage
• Private medically underwritten health plans (for those who qualify medically)
• Supplemental coverage options

Every family’s situation is different.

The goal isn’t finding the same solution for everyone.

It’s finding the solution that best fits your health needs, financial goals, and eligibility.

Looking Ahead to 2027

The increase to a 10.22% affordability percentage reflects the continued financial pressure many Americans face when purchasing health insurance.

Over the coming weeks, I’ll be creating additional educational videos explaining:

• How Marketplace income is calculated
• How to estimate your 2027 income
• How premium tax credits work
• When medically underwritten plans may be worth considering
• Common mistakes families make during Open Enrollment

My goal is simple:

To help people understand their options before they feel forced to make rushed decisions.

If you’re concerned about what your health insurance might cost in 2027, don’t wait until Open Enrollment.

Let’s have the conversation now so you understand your options before enrollment season arrives.

Frequently Asked Questions

What is the ACA affordability percentage for 2027?

The IRS announced that the 2027 ACA affordability percentage is 10.22%. This percentage is used to determine Marketplace premium tax credits for eligible individuals and whether employer-sponsored health insurance is considered affordable under IRS rules.

Does 10.22% mean my health insurance premium will be capped at that amount?

No. The affordability percentage is an IRS benchmark. If you do not qualify for Marketplace financial assistance, your premiums may exceed 10.22% of your household income.

Does the affordability percentage affect employer health insurance?

Yes. Employers use the IRS affordability standard to determine whether employee-only coverage meets ACA affordability requirements.

What income is used for Marketplace subsidies?

Marketplace financial assistance is generally based on your household’s Modified Adjusted Gross Income (MAGI) for the tax year.

What if my income changes during the year?

Changes in income can affect your eligibility for Marketplace financial assistance. It’s important to report significant income changes and discuss planning opportunities before Open Enrollment whenever possible.

Should I consider alternatives to Marketplace health insurance?

Possibly. Some healthy individuals and families may qualify for medically underwritten private health insurance plans that are not available to everyone. These plans are not appropriate for every situation, so comparing all available options is important.

When should I start planning for 2027 health insurance?

The best time is before Open Enrollment begins. Early planning allows you to evaluate Marketplace options, employer coverage, income strategies, and alternative plans while you still have time to make informed decisions.

Need help planning your 2027 health insurance strategy?

Whether you’re self-employed, retiring early, purchasing your own health insurance, or trying to determine whether your employer coverage is still the best fit, I’d be happy to help you review your options.

Mere Benefits specializes in helping individuals, families, retirees, and small businesses understand their health insurance choices so they can make informed decisions with confidence.