The IRS has updated the Federal Poverty Level (FPL) guidelines for 2026, and these changes bring a small but important increase in the amounts used to determine whether health coverage is “affordable” under the Affordable Care Act (ACA).
For individuals, the FPL is now $15,960 for the mainland U.S., $18,360 in Hawaii, and $19,950 in Alaska. These higher numbers mean that employers can charge a slightly higher employee contribution for the lowest-cost, single-coverage plan and still meet ACA affordability rules. For non-calendar year plans starting in 2026, the mainland FPL affordability threshold is $132.46 per month.
| FPL Affordability | Calendar Year 2026 Plan | Non-Calendar Year 2026 Plan |
| Mainland FPL | $15,650 ÷ 12 × 9.96% = $129.89/mo. | $15,960 ÷ 12 × 9.96% = $132.46/mo. |
| Hawaii FPL | $17,990 ÷ 12 × 9.96% = $149.31/mo. | $18,360 ÷ 12 × 9.96% = $152.38/mo. |
| Alaska FPL | $19,550 ÷ 12 × 9.96% = $162.26/mo. | $19,950 ÷ 12 × 9.96% = $165.58/mo. |
Who This Affects
This update matters to Applicable Large Employers (ALEs)—those with an average of 50 or more full-time and full-time equivalent employees in 2025. It applies whether you offer a fully insured plan, self-insured or level-funded coverage, or an Individual Coverage HRA (ICHRA).
ALEs must offer coverage that is affordable and provides minimum value (MV) to all full-time employees (those working 30+ hours per week) and their dependents up to age 26. Because employers usually don’t know each employee’s household income, the ACA allows the use of three “safe harbors” to determine affordability: FPL, Rate of Pay, or W-2 wages.
Why the FPL Safe Harbor Stands Out
The FPL safe harbor is often the easiest and most protective option. Instead of trying to guess each employee’s income, affordability is based on a fixed dollar amount. When the lowest-cost single MV plan stays within the FPL threshold, employers gain several advantages:
- Coverage is affordable for the entire year, regardless of individual employee wages.
- Employees cannot claim premium tax credits on the public health insurance Exchange, reducing the risk of employer penalties.
- Employers can use simplified ACA reporting through the Qualifying Offer Method, making Form 1095-C reporting easier to manage.
For 2026, an FPL-affordable plan means the employee’s monthly contribution for the lowest-cost single MV plan cannot exceed 9.96% of the FPL. That works out to $132.46 per month for the mainland, $152.38 in Hawaii, and $165.58 in Alaska for non-calendar year 2026 plans.
Practical Impact
For employers seeking certainty and simplicity, utilizing the FPL safe harbor is a fail-safe strategy. If your plan stays under the FPL threshold, it guarantees that coverage is affordable for all full-time employees and their dependents, prevents Exchange premium tax credit claims, and minimizes the risk of ACA penalties.
If your current plan can’t meet the FPL limits, it may be worth exploring a lower-cost MV plan that does. This approach not only keeps you compliant but also simplifies ACA reporting and protects the company from unexpected liability.
Key Takeaway
Design your lowest-cost single MV plan to stay at or below the FPL threshold. By doing so, you make coverage affordable, protect your company from penalties, and simplify ACA compliance, giving you confidence and peace of mind for the entire plan year.