--- title: Affordability Percentage Decreases for 2024 description: The IRS announced the affordability percentage that will apply under the ACA's pay or play rules for plan years beginning in 2024. image: https://blog.nisbenefits.com/hubfs/blog-headers/24-affordability-percent-b.jpg --- ![Affordability Percentage Decreases for 2024](https://blog.nisbenefits.com/hubfs/blog-headers/24-affordability-percent-b.jpg) # Affordability Percentage Decreases for 2024 - Home - [Employee Benefit News for School, City and County Employers](https://blog.nisbenefits.com) - Affordability Percentage Decreases for 2024 [ Rick Labian ](https://blog.nisbenefits.com/author/rick-labian) 08/31/2023 [ Health Insurance Solutions](https://blog.nisbenefits.com/topic/health-insurance-solutions), [ Legislative News](https://blog.nisbenefits.com/topic/aca-other-legislative-news) [0 Comments ](https://blog.nisbenefits.com/affordability-percentage-decreases-for-2024#postComment) 1 Minutes *1.5 minute read* The IRS recently announced the affordability percentage that will apply under the Affordable Care Act’s (ACA) pay or play rules for plan years beginning in 2024. Employer sponsored coverage will be considered affordable if the employee’s required contribution for self-only coverage does not exceed 8.39% of their annual household income.   ## **Pay or Play Rules** Under the pay or play rules, applicable large employers (ALEs) must offer affordable, minimum-value health coverage to their full-time employees or be penalized. Coverage is considered affordable if the employee’s required contribution to the plan does not exceed 9.5% (as adjusted) of their household income for the taxable year. ** ** ## **The Impact** For 2024, the affordability percentage has decreased to 8.39%. This is a substantial decrease, and the lowest this percentage has ever been set. As a result, many employers may have to significantly lower their employee contributions for 2024 to meet the adjusted percentage. For employers with 50 or more full-time employees, at least one of the single-only health plans offered to full-time employees must satisfy the ACA’s affordability standard, or they risk a penalty if employees purchase a policy on the Marketplace. Since employers won’t likely know an employee’s household income, the IRS has three optional affordability safe harbors that ALEs can use to determine affordability based on information they have: the Form W-2 safe harbor, the rate of pay safe harbor, and the federal poverty safe harbor.   Download the [bulletin](https://blog.nisbenefits.com/hubfs/blog-supporting-docs/bulletin-affordability-percentage-2024.pdf) for more details. 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