The Department of Health and Human Services (HHS) has updated the federal poverty level (FPL) guidelines effective January 15, 2025. The 2025 FPL is set at $15,650 for a mainland U.S. individual (up from $15,060 in 2024), $19,550 for Alaska (up from $18,810), and $17,990 for Hawaii (up from $17,310). These updates influence affordability calculations under the Affordable Care Act (ACA) for employer shared responsibility (ESR) assessments.
ACA Impact on Employers
Premium Tax Credits
Individuals earning between 100% and 400% of the FPL may qualify for premium tax credits for public exchange coverage. Receipt of these credits by ACA full-time employees can trigger ESR penalties for employers.
Affordability Safe Harbor Testing
Employers may use the FPL as one of the ACA’s affordability safe harbors to determine whether their lowest-cost, self-only minimum essential coverage (MEC) meets affordability criteria. The ACA benchmark affordability percentage for 2025 is 9.02%, up from 8.39% in 2024.
Employers with calendar-year plans must use the 2024 FPL for 2025 affordability testing, while non-calendar-year plans beginning in 2025 may apply the updated 2025 FPL.
2025 Affordability Safe Harbor Contribution Limits
|
Non-calendar-year |
2025 Calendar-year |
|
|
Mainland U.S. |
$117.64 | $113.20 |
| Alaska | $146.95 | $141.39 |
| Hawaii | $135.22 | $130.11 |
Employer Considerations
Employers should review their health plan contributions and compliance strategies to avoid penalties under ESR rules.
While the updated FPL levels provide important affordability benchmarks, the timing of their release may impact employer decisions. Employers should integrate these updates into ACA compliance efforts, especially for affordability testing and safe harbor applications for 2026.