The Department of Health and Human Services (HHS) has announced the 2025 federal poverty guidelines, also referred to as federal poverty levels or lines (FPLs). These guidelines are published annually and used by a number of federal agencies to help determine eligibility for numerous federal healthcare assistance programs — including Medicare, Medicaid and the Children’s Health Insurance Program — as well as the Affordable Care Act (ACA).
Under the ACA, the FPLs are used to determine eligibility for premium tax credits or cost-sharing reduction subsidies on the public exchange and to calculate the employee’s required contribution threshold under the FPL affordability safe harbor for the employer shared responsibility mandate.
An employer with 50 or more full-time employees and full-time employee equivalents (i.e., an applicable large employer, or ALE) must offer minimum essential health coverage that is affordable and provides minimum value to its full-time employees and their eligible dependents or face potential penalties.
To meet the affordability requirement, the employee contribution for the lowest-cost health benefit option must not exceed 9.02% (for plan years beginning in 2025) of the full-time employee’s household income. In lieu of requiring employers to calculate each full-time employee’s household income for the year, the IRS allows the use of three affordability safe harbors: 1) Form W-2 (based on an employee’s Form W-2, Box 1 compensation reported for the year); 2) rate of pay (based on an employee’s hourly or monthly rate of pay); and 3) FPL.
For purposes of applying the FPL safe harbor, the FPL is determined by the state in which the employee is employed. The 2025 FPLs for the 48 contiguous states (and the District of Columbia), Alaska and Hawaii are as follows:
For 2025, the FPL safe harbor is determined by multiplying 9.02% by the applicable FPL threshold and dividing that product by 12. The result is the monthly limit on the employee-only contribution for the ALE’s lowest-cost option that meets the FPL affordability safe harbor (i.e., $117.64 per month for the contiguous U.S.).
Note that the employer shared responsibility regulations allow employers to use the FPL guidelines in effect within six months before the first day of the plan year. Since the 2025 FPLs were not in effect until January 15, 2025, calendar-year plans must use the 2024 FPLs when calculating affordability for purposes of the FPL safe harbor for 2025 (i.e., $113.20 per month for the contiguous U.S.).
