About the ACA Employer Affordability Calculator
Under the Affordable Care Act, employer health coverage is "affordable" when the employee’s required contribution for the lowest-cost self-only plan that provides minimum value does not exceed a set percentage of income. For plan years beginning in 2026 that percentage is 9.96%, up from 9.02% in 2025 and 8.39% in 2024. The test matters twice: applicable large employers (50+ full-time equivalents) can owe a §4980H(b) penalty if coverage is unaffordable and an employee gets a Marketplace subsidy, and employees offered affordable coverage cannot claim the premium tax credit.
Because employers rarely know household income, the IRS lets them use one of three safe harbors instead: Form W-2 Box 1 wages, the employee’s rate of pay (130 hours a month times the hourly rate, or monthly salary), or the federal poverty line for a single person. This calculator runs whichever test you choose and shows the maximum monthly contribution that still passes.
Employees checking their own eligibility for a subsidy should choose household income, since that is the measure used for the premium tax credit. Only the cost of self-only coverage counts for the employee, even if they enroll in family coverage.
How to use the aca employer affordability calculator
- 1Choose the plan year — the percentage changes every year.
- 2Pick a safe harbor, or household income if you are an employee.
- 3Enter the employee’s monthly contribution for the cheapest self-only plan.
- 4Enter the wages, rate of pay or poverty line the test needs.
- 5Read the result and the maximum contribution that still passes.
Formula and method
The required contribution percentage p is 9.96% for plan years beginning in 2026 (Rev. Proc. 2025-25), 9.02% for 2025 and 8.39% for 2024. Under the W-2 safe harbor the employer compares the employee’s contribution with Box 1 wages; this calculator spreads the annual figure over 12 months. Under the rate-of-pay safe harbor, an hourly employee’s monthly income is deemed to be 130 hours times the hourly rate (the lowest rate during the month if it was cut), and a salaried employee’s monthly salary is used.
Under the federal poverty line safe harbor, coverage is affordable for everyone if the contribution does not exceed p% of the single-person poverty guideline divided by 12. For an employee checking subsidy eligibility, the measure is household income for the year. Only self-only coverage that provides minimum value is tested.
- p%
- Required contribution percentage for the plan year
- Contribution
- Employee’s monthly share of the lowest-cost self-only minimum-value plan
- FPL
- Federal poverty guideline for one person
Worked examples
W-2 safe harbor, $45,000 wages, $150 a month
9.96% of $45,000 is $4,482 a year, or $373.50 a month. A $150 monthly contribution is only 4% of wages, so coverage is affordable with $223.50 to spare.
Hourly worker at $15 with a $210 contribution
130 hours × $15 = $1,950 of deemed monthly income; 9.96% of that is $194.22. The $210 contribution is 10.77% of income, so the employer would need to cut it by $15.78 to pass.
Poverty-line safe harbor for 2026
9.96% × $15,650 ÷ 12 = $129.90. Any self-only contribution at or below that is affordable for every employee, so $125 passes.
Employee subsidy check for 2025
For 2025 the limit is 9.02% of household income: $30,000 × 9.02% ÷ 12 = $225.50 a month. A $240 contribution exceeds it, so the employee could look into a Marketplace premium tax credit.
Frequently asked questions
What is the ACA affordability percentage for 2026?+
For plan years beginning in 2026, employer coverage is affordable if the employee’s required contribution for the lowest-cost self-only minimum-value plan is no more than 9.96% of income, per IRS Rev. Proc. 2025-25. It was 9.02% for 2025 and 8.39% for 2024.
What are the ACA affordability safe harbors?+
Employers can measure affordability against Form W-2 Box 1 wages, the employee’s rate of pay (130 hours × hourly rate, or monthly salary), or the federal poverty line for a single person. Using a safe harbor protects the employer from §4980H(b) penalties even if the employee’s household income is different.
Does family coverage cost count in the affordability test?+
For the employee, only the cost of self-only coverage counts. Since 2023, family members are tested separately using the cost of family coverage against household income for their own premium tax credit eligibility, but the employer penalty test still uses self-only cost.
What happens if employer coverage is not affordable?+
An eligible employee can buy Marketplace coverage with a premium tax credit. If at least one full-time employee does so, an applicable large employer may owe the §4980H(b) assessable payment for each such employee and month.
Does the affordability test apply to small employers?+
The employer penalty applies only to applicable large employers — those with 50 or more full-time employees including full-time equivalents. Employees of small employers still use the affordability test to see whether an offer blocks their own premium tax credit.
Tax results are estimates based on published rules and simplified assumptions. They are not tax advice — check official guidance or a tax professional for your situation.
Sources
- IRS Rev. Proc. 2025-25 — 2026 required contribution percentage (9.96%)
- IRS Rev. Proc. 2024-35 — 2025 required contribution percentage (9.02%)
- IRS Rev. Proc. 2023-29 — 2024 required contribution percentage (8.39%)
- 26 CFR §54.4980H-5 — affordability safe harbors
- IRS — Questions and answers on employer shared responsibility provisions
- HHS ASPE — Poverty guidelines