ACA Affordability Calculator
Check whether your health-plan contribution meets the ACA affordability safe-harbor percentage.
Reviewed by theComplianceToolsLibrary Editorial Team · Last updated
Key facts
- Affordability percentage
- An annually adjusted figure around 9% of income — verify the current year's percentage
- Based on
- The employee's required contribution for the lowest-cost self-only plan
- Safe harbors
- W-2 wages, rate of pay, or federal poverty line
- Applies to
- Applicable Large Employers offering coverage
What is ACA affordability?
An Applicable Large Employer must offer coverage that is "affordable" to avoid penalties. Coverage is affordable if the employee's required contribution for the lowest-cost, self-only plan does not exceed an annually adjusted percentage of their income — a figure the IRS sets each year (it has hovered around 9%).
Because employers rarely know household income, the rules provide three safe harbors based on data you do have: the employee's W-2 wages, their rate of pay, or the federal poverty line. If the contribution stays within the applicable percentage under any one safe harbor, the coverage is treated as affordable.
How to use this tool
- 1
Enter the contribution
Enter the employee's monthly cost for the lowest-cost self-only plan.
- 2
Enter the income measure
Enter the employee's monthly W-2 wages or rate-of-pay figure.
- 3
Enter the current percentage
Use the IRS affordability percentage for the year (verify it first).
- 4
Review the result
See whether the contribution falls within the affordability threshold.
Common mistakes to avoid
- Using a prior year's affordability percentage after the annual adjustment.
- Measuring affordability against family coverage instead of self-only.
- Ignoring the safe harbors and trying to use household income.
- Forgetting that a plan must also provide minimum value, not just be affordable.
What to do next
- Confirm the current year's IRS affordability percentage.
- Pick a consistent safe harbor (W-2, rate of pay, or FPL).
- Ensure the plan also meets minimum value.
- Confirm ALE status with the ACA Full-Time Equivalent Calculator.
Sources
Frequently asked questions
What percentage makes ACA coverage affordable?
An annually adjusted percentage of income — historically around 9%. Verify the exact figure the IRS set for the current year.
What are the ACA affordability safe harbors?
The W-2 wages safe harbor, the rate-of-pay safe harbor, and the federal poverty line safe harbor.
Is affordability based on individual or family coverage?
It's based on the employee's required contribution for the lowest-cost self-only plan.
Does affordable coverage also have to provide minimum value?
Yes. To avoid penalties, coverage must be both affordable and provide minimum value.
Related tools
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