On Monday, August 30, 2021, the Internal Revenue Service (IRS) issued Rev. Proc. 2021-36. The revenue procedure provides the required contribution percentage and applicable percentage table for the 2022 calendar year. An employer-sponsored benefits plan uses the required contribution percentage to determine whether the plan is affordable according to the Affordable Care Act (ACA) Section 4980H(b) requirements. The applicable percentage table is used to calculate an individual’s premium tax credit (PTC). These 2022 indexed adjustments for affordability and PTC determinations are discussed in more detail below.

The employer shared responsibility (ESR) provisions under Section 4980H of the ACA require an applicable large employer (ALE) to offer minimum essential coverage (MEC) that is both minimum value and affordable.

An ALE is an employer with an average of at least 50 full-time equivalent employees during the proceeding calendar year. ALEs are subject to ESR provisions, meaning the plan must offer affordable MEC that provides minimum value and affordability. Failing to offer affordable, minimum value coverage may result in ESR penalties. To avoid the ESR penalty employers must offer coverage that meets the 60% minimum value threshold and the employee contributions cannot exceed the indexed affordability percentage.

The indexed affordability percentage is 9.61% for plan years beginning in 2022.

The baseline for the affordability percentage is 9.5% and it is adjusted annually by the IRS. The 2022 affordability percentage of 9.61% is a decrease from the 9.83% affordability percentage for plan years beginning in 2021. Based on the indexed affordability percentage, employee contribution amounts for self-only coverage cannot exceed 9.61% of their household income in 2022. The affordability percentage limit applies to the lowest cost, self-only, wellness non-discounted, non-tobacco plan rate.

The PTC generally applies to taxpayers who purchase insurance through an exchange, whose household income ranges from 100% to 400% of the federal poverty line (FPL).

The American Rescue Plan Act (ARPA) eliminated the upper income limit for eligibility to receive the PTC. It also decreased the percentage of household income that individuals must contribute for exchange coverage. The adjusted percentages for 2022 are the same as those for 2021 and range from 0% for the lowest earners to 8.5% for the highest earners. The adjusted percentage table can be found on Rev. Proc. 2021-36.

For additional details on the 2022 adjusted items refer to Internal Revenue Bulletin: 2021-35.


EPIC offers this material for general information only. EPIC does not intend this material to be, nor may any person receiving this information construe or rely on this material as, tax or legal advice. The matters addressed in this document and any related discussions or correspondence should be reviewed and discussed with legal counsel prior to acting or relying on these materials.


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Compliance Manager – Atlanta, GA