2026 FPL Announced – Why it Matters to Employers

The 2026 annual Cost of Living update to the Federal Poverty Level (FPL) was recently released. The level for a single individual is $15,960 (up from $15,650 in 2025). The FPL guidelines are used by a number of federal healthcare assistance programs including Medicare, Medicaid (Medi-Cal in California), and the Children’s Health Insurance Program (CHIP). FPL is also used to determine eligibility for premium tax credits and premium subsidies on the exchange.

The FPL is relevant for employers who use the FPL Safe Harbor for ACA affordability calculations to determine affordability of coverage under the ACA.

Quick Refresher on the Affordability Rules

The ACA requires applicable large employers (ALEs) to offer full-time employees affordable, minimum essential coverage that provides minimum value to avoid the not-insignificant Shared Responsibility Payments.

To satisfy the affordability requirement, the lowest cost health insurance coverage option for a single employee cannot exceed 9.96% (for 2026) of the employee’s total household income. Because total household income of employees is generally not known to employers, the regulations provide for three safe harbor options for employers to affirm affordability of coverage. These methods are:

• The FPL safe harbor
• The W-2 safe harbor
• The Rate of Pay safe harbor

Under the FPL safe harbor, coverage is considered affordable if the cost to employees for self-only coverage on the lowest-cost single employee coverage offered is less than 9.96% of the FPL which results in a maximum monthly employee contribution of $132.46 for self-only coverage ($15,960 FPL / 12 months x 9.96%). This calculation of the maximum monthly premium informs why the updated FPL is relevant to employers. The FPL is not relevant to the affordability calculation for employers using the W-2 or Rate of Pay safe harbor methods. 

Six Months Prior Rule

Employers are permitted to use the FPL guidelines in effect six months prior to the beginning of the plan year to calculate affordability under the FPL safe harbor. This is important because the annual FPL amount is generally not released until after the calendar year begins, and long after when employers need to make plan and contribution decisions for Open Enrollment.

As such, calendar year plans typically rely on the prior year’s FPL. Notably, the 2026 FPL must be used for plans with Plan Years beginning on or after July 1, 2025.

Updated 2026 FPL Numbers

For reference, the following chart outlines the actual 2026 FPL thresholds for various household sizes. These numbers are for the 48 contiguous states and DC. Alaska and Hawaii have state-specific thresholds.  

For families/households with more than eight persons, add $5,680 for each additional person. 

Employer Action Item

Employers using the FPL Safe Harbor who have plan years beginning on or after July 1, 2025, must consider the updated 2026 FPL thresholds in planning for the 2026 plan year. It is necessary to use the updated FPL number when calculating the lowest-cost health coverage premiums/contributions for employees and to confirm that it is within the ACA’s safe harbor affordability threshold.