What is the ACA affordability percentage for 2027?

As confirmed in IRS Revenue Procedure 2026-26, the ACA affordability threshold for plan years beginning in 2027 is 10.22%, up from 9.96% in 2026.

How do you calculate ACA affordability for 2027?

Multiply the applicable income or wage measure by 10.22%, depending on the affordability test or safe harbor you’re using. For example, under the Rate of Pay safe harbor, an employee earning $5,000 per month has a monthly affordability limit of $511.

What happens if an employer's health coverage isn't affordable?

An ALE may owe one of two employer shared responsibility payments under Section 4980H if its coverage is unaffordable or fails to meet minimum essential coverage (MEC) or minimum value standards and at least one full-time employee receives a premium tax credit for a Marketplace plan.

Can employers use safe harbors to determine ACA affordability?

Yes. ALEs can use the federal poverty level, rate of pay, or Form W-2 safe harbor to verify affordability for purposes of the employer mandate. These methods help employers determine ACA compliance without knowing employees' actual household income.

How does the 2027 affordability threshold affect a CHOICE Arrangement?

The 10.22% threshold helps determine whether a CHOICE Arrangement, formerly known as an ICHRA, is affordable coverage under the ACA so ALEs can avoid tax penalties. Employers will use their employees’ household income (or a safe harbor) and the lowest-cost silver plan on the local exchange to run the calculation. They must also subtract employees’ ICHRA contributions from the premium.

What is the difference between an HMO and a PPO?

The main difference is provider flexibility. With an HMO, you generally have to use in-network providers for non-emergency care. You may also need a referral to see specialists. PPOs generally allow you to see specialists without referrals and provide some coverage for out-of-network care, although you'll usually pay more.

Which health insurance network type is best for individual coverage?

There isn't one network type that is best for everyone. The right choice depends on your preferred doctors and hospitals, how often you see specialists, whether you need out-of-network coverage, and your budget. When comparing individual plans, review the provider network, covered services, premiums, deductibles, and other cost-sharing requirements.

Can employees choose different health insurance networks through a CHOICE Arrangement?

Yes. A CHOICE Arrangement, formerly known as an ICHRA, allows eligible employees to choose individual health insurance coverage that meets their needs, subject to the terms of the employer's arrangement. This means employees can select plans with different network types, such as HMOs, PPOs, EPOs, or POS plans, rather than all employees enrolling in the same group health plan.

When is ACA Open Enrollment?

Currently, Open Enrollment runs from November 1 through January 15 in most states using the federal Marketplace. Enrolling by December 15 allows coverage to begin January 1, while enrolling between December 16 and January 15 means your health plan will take effect on February 1. To activate coverage, you must pay your first month’s premium by the deadline. State-based exchanges may have different deadlines, so check your state's Marketplace before enrolling in a health plan.

Can I change my health plan during Open Enrollment?

Yes. During Open Enrollment, you can enroll in a new Marketplace plan, switch plans, renew your current coverage, or make changes to your household coverage. Outside of Open Enrollment, you typically need to qualify for a special enrollment period to change an ACA health plan.

What happens if I miss Open Enrollment?

If you miss the Open Enrollment deadline, you must wait until the next Open Enrollment Period unless you qualify for a special enrollment period. Qualifying events can include losing other health coverage, getting married, having a baby, or an employer’s offer of a new health benefit, like an ICHRA.

Can I enroll in a health insurance policy outside of Open Enrollment?

You can enroll in a health plan outside of Open Enrollment if you’re eligible for a special enrollment period. If you don’t qualify for a special enrollment period, you may qualify for Medicaid or CHIP if you meet the eligibility requirements, or you can purchase short-term health insurance on a private exchange.

Do I have to enroll in individual health insurance to use an ICHRA?

Yes. To use an ICHRA, you must have a qualifying ACA-compliant individual health plan that provides minimum essential coverage (MEC), Medicare Parts A and B together, or Medicare Part C. Short-term health insurance and other limited benefits don't satisfy the individual coverage requirement for an ICHRA. If you have one of these plans, you can switch to a qualified health insurance policy during Open Enrollment so you can participate in your ICHRA benefit.

What is the difference between a Bronze, Silver, Gold, and Platinum health plan?

The main difference between the four metal tiers is how the plan divides costs between the insurer and the planholder. Bronze plans have an actuarial value of about 60%, and Silver has 70%. Gold coverage has an actuarial value of 80%, and Platinum has 90%. In general, higher-tier plans have higher premiums but lower out-of-pocket costs when you receive care.

Which metal tier is best for health insurance?

There isn't a single metal tier that's best for everyone, as consumers have varying healthcare needs. Bronze may work well for someone who wants a lower premium and doesn’t expect to use much healthcare during the plan year. Gold or Platinum might be a better fit for someone who expects higher medical expenses or has a chronic condition. Those searching for a middle-ground policy or needing cost-sharing reductions may find a Silver plan to be the best option.

Does a higher metal tier mean better health insurance?

No. Metal tiers describe how the plan will divide healthcare costs between you and the insurance company. They don't indicate the quality of your healthcare or guarantee a larger provider network. For example, a Bronze plan can provide the same health benefits as a Platinum plan; however, the cost-sharing structure will be different.

Can I use an ICHRA with a Bronze, Silver, Gold, or Platinum plan?

Yes. Employees with an ICHRA only need qualifying individual health insurance coverage to use the benefit, regardless of the plan’s metal tier. However, how the ICHRA and premium tax credits work together depends on your benefit’s affordability. If your ICHRA is affordable (meaning you’re not paying more than 9.96% of your actual income for the lowest-cost Silver plan on a public health exchange), you can't receive your premium tax credit. If it's unaffordable, you can opt out of the ICHRA and collect your tax credits.

Does ICHRA help employees pay for individual health insurance coverage?

Yes. With an ICHRA, employees receive a tax-free employer contribution that they can use toward their individual health insurance premiums.

Do employees have to choose the same health insurance plan with ICHRA?

No. One of the biggest advantages of ICHRA is that employees can choose individual health insurance plans based on their own healthcare preferences, budget, and preferred providers.

Where can employees buy individual health insurance plans with ICHRA?

Employees can purchase individual health insurance plans through the Health Insurance Marketplace, a state marketplace, or directly from an insurance company. With ICHRA, employees may also have the option to choose off-exchange plans, which can provide additional plan choices depending on their location. With Remodel Health’s ICHRA+, most employees enroll in off-exchange plans through our platform.

What are the most popular health plan types chosen by Remodel Health ICHRA+ members?

Gold copay plans, bronze HSA plans, and silver copay plans make up the majority of selections.

Do employees with ICHRA tend to choose gold or bronze plans?

Gold and bronze plans are both popular choices among Remodel Health ICHRA+ members, with 28% choosing Gold copay plans and 27% choosing Bronze HSA plans.

What is the difference between Medicaid and CHIP?

Medicaid provides health coverage for eligible low-income individuals and families, including adults, children, pregnant individuals, seniors, and people with disabilities. In contrast, CHIP is primarily for children and certain pregnant individuals whose household income is too high to qualify for Medicaid but too low to comfortably afford private health insurance.

Can you have Medicaid and private health insurance at the same time?

Yes. In some situations, individuals can have Medicaid and another form of health insurance simultaneously. When this happens, Medicaid may help pay for certain medical costs the primary insurance plan doesn’t cover. However, coordination of benefits rules may vary depending on the type of private coverage the individual has and their state requirements.

What income levels qualify for Medicaid?

Medicaid income limits vary by state, household size, and eligibility category. Most states use modified adjusted gross income (MAGI) to determine eligibility for children, parents, and many adults. In states with Medicaid expansion due to the Affordable Care Act (ACA), adults with household incomes up to 138% of the federal poverty level may qualify.

Can adults qualify for CHIP?

CHIP is primarily for children younger than age 19. However, some states allow certain pregnant individuals to qualify for CHIP coverage.

Can employees with Medicaid participate in an ICHRA?

No. While Medicaid counts as minimum essential coverage (MEC), the federal government doesn’t consider it qualifying individual health insurance, which is necessary to participate in an ICHRA. Employees must enroll in an eligible individual health plan to use their ICHRA benefit.

Does an ICHRA affect CHIP eligibility?

It can. A child's eligibility for CHIP may depend on whether the employee's ICHRA meets affordability standards. Because CHIP rules differ by state, employees should contact their state's Marketplace or Medicaid agency to determine how an ICHRA offer affects their family's eligibility.

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