Finally, an annual limit is set each year by the IRS to address the ACA’s affordability requirement. The annual limit is a cap on an employee’s premium contribution for employer-sponsored health insurance. The annual limit is expressed as a percentage of the employee’s household income, and the lowest cost option for employee-only coverage is used in determining affordability. The affordability requirement applies to employers with more than 50 employees. For 2021, the annual limit is 9.83 percent (see question 40 of the IRS ACA affordability FAQs). If the employee would have to pay more than 9.83 percent of their household income for self-only coverage under the lowest-cost plan the employer offers (assuming the plan provides minimum value), the employee would be able to reject that coverage and apply for a premium subsidy for a plan in the exchange instead.