3 Ways to Determine Affordability Safe Harbors

Affordability Safe Harbors

Health coverage affordability is an important part of complying with the ACA’s Employer Mandate. Failing to comply can result in penalties and fines. So, how do employers determine affordability? There are three affordability safe harbors that can be used: Form W-2, Federal Poverty Line (FPL), and Rate of Pay. ACA Employer Mandate The ACA Employer … Read more

Determining Affordability Safe Harbor (2016)

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Perhaps one of the more complex pieces of the ACA compliance equation is the affordability safe harbor provisions.

At its simplest, coverage is considered affordable if the premium constitutes less than 9.8% of the household income of an eligible employee. Since this calculation takes into account the take home pay for spouses, it is often difficult (if not impossible) for a large employer to make this calculation, so the IRS has provided 3 alternative calculations that they refer to as affordability safe harbors.

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