What is the ACA affordability test for 2024?
Asked by: Abbey Boehm IV | Last update: November 9, 2025Score: 4.6/5 (68 votes)
What is the ACA affordability threshold for 2024?
On September 6, 2024, the IRS issued Revenue Procedure 2024-35. It announced that the Affordable Care Act (ACA) affordability threshold is increased from 8.39% for 2024 to 9.02% for 2025.
How is affordability calculated in 2024?
The IRS announced that the 2024 health plan affordability threshold—which is used to determine if an employer's lowest-premium health plan meets the Affordable Care Act's (ACA's) affordability requirement—will be 8.39 percent of an employee's household income.
What is the ACA affordability for 2024 FPL?
For plan year 2024, the FPL affordability percentage is 8.39%, which is the lowest affordability percentage since the ACA's inception (see Tax Alert 2023-1444).
How to calculate ACA affordability threshold?
Take the employee's lowest hourly rate for the month and multiply the number by 130, the minimum total of hours a worker must provide to be classified as a full-time employee under the ACA. Take the product of that calculation and multiply it by 9.02% for 2025.
ACA 101: A Comprehensive Guide to the Affordable Care Act
What is the affordability formula?
While you may have heard of using the 28/36 rule to calculate affordability, the correct DTI ratio that lenders will use to assess how much house you can afford is 36/43.
What is the Affordability Act 2024?
The Health Care Affordability Act of 2024 includes technical edits to ensure that no household pays above 8.5% of their incomes towards their health care premiums.
What is the ACA affordability threshold for 2025?
The affordability percentage threshold was changed as follows: 2023: 9.12% 2024: 8.39% 2025: 9.02%
What is the ACA 9.5 affordability test?
Employer-provided coverage is considered affordable for an employee if the employee required contribution is no more than 9.5 percent (as adjusted) of that employee's household income.
How do you calculate affordability?
Using a percentage of your income can help determine how much house you can afford. For example, the 28/36 rule suggests your housing costs should be limited to 28 percent of your total monthly gross income and 36 percent of your total debt.
What is the projected cost of living adjustment for 2024?
The latest COLA is 2.5 percent for Social Security benefits and SSI payments. Social Security benefits will increase by 2.5 percent beginning with the December 2024 benefits, which are payable in January 2025. Federal SSI payment levels will also increase by 2.5 percent effective for payments made for January 2025.
What is my affordability score?
Your affordability score is all about how much you earn, your day-to-day expenses, and what you can afford to pay back. It focuses on your financial position in the here and now. Companies like ClearScore help calculate your affordability score.
What is the ACA Affordability Act?
The Affordable Care Act contains comprehensive health insurance reforms and includes tax provisions that affect individuals, families, businesses, insurers, tax-exempt organizations and government entities. These tax provisions contain important changes, including how individuals and families file their taxes.
What income is used to determine the Affordable Care Act?
Under the Affordable Care Act, eligibility for income-based Medicaid and subsidized health insurance through the Marketplaces is calculated using a household's Modified Adjusted Gross Income (MAGI).
What is the income limit for ACA subsidies in 2024?
In 2024, an individual in a one-person household is eligible for some degree of Covered California subsidies if they earn up to $33,975 Meanwhile, that limit rises to $69,375 for a household size of 4. These numbers refer to your Adjusted Gross Income (AGI) as found on line 11 of your Form 1040.
What is the affordability for 2024?
In 2024, a job-based health plan is considered "affordable" if your share of the monthly premium in the lowest-cost plan offered by the employer is less than 8.39% of your household income. In 2025, it is considered "affordable" if the premium is less than 9.02% of your household income.
What is the safe harbor for ACA 2024?
Rate of pay safe harbor
For hourly employees, premiums may be no more than 8.39% of the monthly rate of pay (calculated using the lower of hourly rate of pay for the month or the hourly rate of pay at the beginning of the coverage period multiplied by 130 hours).
What is the ACA maximum out of pocket for 2024?
For the 2024 plan year: The out-of-pocket limit for a Marketplace plan can't be more than $9,450 for an individual and $18,900 for a family.
What is the ACP program for seniors?
Affordable Connectivity Program
Launched in early 2022, the program offers eligible households up to a $30 discount on their monthly internet bill ($75 for households on qualifying Tribal lands). ACP households are also eligible for a one-time $100 discount when buying a laptop or tablet from participating providers.
What is the affordability limit?
In general, the maximum income limit for an affordable home is 85.5% of the open market value of the home divided by 4. There are some exceptions to this rule which can be viewed here. Other eligibility criteria are: You are over 18 years of age.
How do I calculate ACA affordability?
The W-2 Safe Harbor is a method for proving ACA affordability that involves using an employee's W-2 Box 1, gross income. To calculate ACA affordability using the W-2 Safe Harbor, use the following formula: W-2 Box 1 Wages multiplied by 8.39% with an adjustment for partial-year coverage.
How do you pass the affordability test?
Make sure you have all the necessary documentation ready. This can include proof of income, recent bank statements, and details of your monthly expenses. Having all the documents ready will show the lender that you are responsible and well-prepared, increasing your chances of passing the affordability check.
How much house can I afford if I make $70,000 a year?
The house you can afford on a $70,000 income will likely be between $290,000 to $360,000. However, your home-buying budget depends on quite a few financial factors — not just your salary.