Free ACA affordability calculator for 2026 and 2027

What is ACA affordability?

Under the Affordable Care Act (ACA), employers with 50+ full-time equivalent employees must offer health coverage that is "affordable" to avoid Employer Shared Responsibility Payment (ESRP) penalties. Coverage is considered affordable if the employee's cost for self-only coverage does not exceed a specific percentage of their household income.

For plan years beginning in 2026, the affordability threshold is 9.96% of household income. For plan years beginning in 2027, it is 10.22% (Rev. Proc. 2026-26).

If an employee's self-only contribution is more than the plan year's percentage of household income (9.96% for 2026, 10.22% for 2027) and the employee receives a premium tax credit through the Marketplace, the employer may face the adjusted Section 4980H(b) penalty. For 2026, the annual adjusted amount is $5,010 for each affected full-time employee. For 2027 it is $5,670 (Rev. Proc. 2026-22).

ACA affordability percentage by plan year

The IRS adjusts the affordability percentage annually based on premium growth. Here's the history:

• 2027: 10.22% (plan years beginning in 2027)
• 2026: 9.96% (plan years beginning in 2026)
• 2025: 9.02%
• 2024: 8.39%
• 2023: 9.12%
• 2022: 9.61%
• 2021: 9.83%
• 2020: 9.78%

Three ACA affordability safe harbors

Since employers don't know employees' household income, the IRS provides three "safe harbors" employers can use to demonstrate affordability:

1. Rate of pay safe harbor

Calculate affordability based on the employee's hourly wage or monthly salary at the start of the coverage period.

Formula:

• Hourly employees: Hourly wage × 130 hours × the plan year's percentage
• Salaried employees: Monthly salary × the plan year's percentage

Example: Employee earns $18/hour. Maximum affordable premium: $18 × 130 × 9.96% = $233.06/month for a 2026 plan year, or $18 × 130 × 10.22% = $239.14/month for 2027.

2. W-2 safe harbor

Calculate affordability based on the employee's W-2 Box 1 wages for the calendar year.

Formula: (W-2 Box 1 wages ÷ 12) × the plan year's percentage

Example: Employee's W-2 shows $48,000. Maximum affordable premium: ($48,000 ÷ 12) × 9.96% = $398.40/month for a 2026 plan year, or ($48,000 ÷ 12) × 10.22% = $408.80/month for 2027.

Note: Only works retrospectively; useful for demonstrating compliance after year-end.

3. Federal poverty level (FPL) safe harbor

Calculate affordability based on the federal poverty level for a single individual in the continental U.S.

Which guideline applies: the one in effect before the plan year starts, so a calendar-year plan uses the previous year's figure.

• Plan year starting January 1, 2026: 2025 guideline, $15,650. ($15,650 ÷ 12) × 9.96% = $129.89/month
• Plan year starting February 1, 2026 or later: may use the 2026 guideline, $15,960. ($15,960 ÷ 12) × 9.96% = $132.46/month
• Plan year starting January 1, 2027: 2026 guideline, $15,960. ($15,960 ÷ 12) × 10.22% = $135.92/month

If employee-only coverage costs no more than the figure for the plan year, it is considered affordable under the FPL safe harbor regardless of actual income. Amounts are rounded down.

How to calculate ACA affordability

Step 1: Determine employee-only premium

Use the lowest-cost self-only coverage option that meets minimum value requirements. Do NOT include dependent coverage costs.

Step 2: Choose safe harbor method

Select which safe harbor to apply:

• Rate of Pay: Best for employers with consistent wage rates
• W-2: Best for variable income employees (retrospective only)
• FPL: Simplest but most conservative; works for all employees equally

Step 3: Calculate maximum affordable premium

Apply the threshold for the plan year (9.96% for 2026, 10.22% for 2027) to the chosen safe harbor income measure.

Step 4: Compare actual premium to maximum

If actual employee-only premium ≤ maximum affordable premium, coverage is affordable. The test is monthly, while employees see their share per paycheck; the payroll deduction calculator converts between the two.

Step 5: Document compliance

Maintain records showing affordability calculations for potential IRS audit.

ACA affordability calculation examples

Example 1: Hourly employee (rate of pay safe harbor)

• Employee wage: $20/hour
• Standard calculation: $20 × 130 hours = $2,600/month
• Affordability threshold: $2,600 × 9.96% = $258.96/month
• Actual employee premium: $150/month
• Result: AFFORDABLE ($150 < $258.96)

Example 2: Salaried employee (rate of pay safe harbor)

• Monthly salary: $5,000
• Affordability threshold: $5,000 × 9.96% = $498/month
• Actual employee premium: $400/month
• Result: AFFORDABLE ($400 < $498)

Example 3: Low-wage employee (FPL safe harbor)

• Plan year starting January 1, 2026, so the 2025 guideline: $15,650 ÷ 12 = $1,304.17
• Affordability threshold: $1,304.17 × 9.96% = $129.89/month
• Actual employee premium: $145/month
• Result: NOT AFFORDABLE under FPL ($145 > $129.89)
• But might be affordable under Rate of Pay if the employee earns more than $1,456/month

Common ACA affordability mistakes

1. Including dependent coverage

Mistake: Calculating affordability based on family coverage costs
Correct: Only employee-only (self-only) coverage counts for affordability

2. Using wrong threshold percentage

Mistake: Using prior year percentage or wrong year
Correct: Use 9.96% for 2026 coverage and 10.22% for 2027

3. Mixing safe harbor methods mid-year

Mistake: Switching between FPL and Rate of Pay for same employee
Correct: Choose one safe harbor method per employee for entire plan year

4. Forgetting variable hour employees

Mistake: Not tracking affordability for variable hour workers
Correct: Special rules apply; use measurement/stability periods correctly

5. Not documenting calculations

Mistake: No written record of affordability determinations
Correct: Maintain calculations and supporting documentation for 6+ years

Employer shared responsibility penalties

If an employer fails to offer affordable coverage and a full-time employee receives a premium tax credit:

• 4980H(b) penalty: $5,010 per year for 2026 and $5,670 for 2027, for each employee receiving subsidized Marketplace coverage
• Monthly amount: $417.50 per employee per month for 2026, $472.50 for 2027
• Assessment: IRS sends Letter 226J after identifying non-compliance
• Payment deadline: Typically 90 days to respond or pay

Affordability is one of several federal checks in a renewal review. The ERISA compliance checklist covers plan documents, SPDs and Form 5500, and the COBRA administration guide covers continuation coverage. For where the 50-employee line sits next to state small-group rating rules, see small group vs large group.

ACA affordability for different employee types

Full-time employees

Employees averaging 30+ hours per week (or 130 hours per month) must be offered affordable coverage meeting minimum value.

Part-time employees

Generally not required to receive offers, but count toward 50+ FTE threshold calculation.

Variable hour employees

Special look-back measurement periods determine full-time status. Use Rate of Pay safe harbor carefully with variable schedules.

Seasonal employees

Working 6 months or less; special rules apply for counting toward 50 FTE threshold.

Use affordability estimates in a Planlined proposal

Use this calculator to estimate an employee contribution limit for the selected plan year and safe harbor. Bring the result into your review of the contribution strategy and use scenario modeling to compare cost splits before presenting.

• Keep the assumptions: Record the plan year, safe harbor, income measure and employee-only premium used in the estimate.
• Compare contribution choices: Check the proposed employee share against the estimate before selecting a contribution model.
• Review the result: Confirm safe-harbor eligibility and the applicable IRS rules separately. An affordability estimate is not a compliance determination.

The ACA affordability modeling page describes the documented product workflow and its evidence limits. The published worked examples do not demonstrate automatic compliance alerts, population-wide safe-harbor checks, annual product updates or IRS-ready compliance reports.

ACA affordability best practices

• Choose safe harbor strategically: Select method most favorable to your workforce
• Document everything: Maintain written policies and calculation methodology
• Review annually: IRS adjusts percentage each year; update calculations
• Test contribution changes: Model impact before implementing new cost-sharing
• Communicate with employees: Explain how premiums stay affordable
• Monitor wage changes: Raises may require premium adjustments to maintain affordability
• Train HR staff: Ensure team understands affordability requirements
• Consult legal/tax advisors: ACA compliance is complex; get expert guidance

State vs. Federal ACA rules

While ACA is federal law, some states have additional requirements:

• California: Stricter individual mandate with state penalties
• Massachusetts: State-specific affordability standards
• New Jersey: Individual mandate enforcement
• Rhode Island: State mandate provisions
• Vermont: Additional reporting requirements

Always verify state-specific requirements in addition to federal ACA compliance.

ACA affordability and minimum value

Affordability is only one test. Plans must also meet minimum value (MV):

• MV requirement: Plan pays at least 60% of total allowed costs
• MV calculator: IRS provides online calculator at irs.gov
• Safe harbor designs: Most major carrier plans meet MV automatically
• Bronze plans: Generally meet 60% threshold for MV compliance

Coverage must be both affordable AND meet minimum value to avoid penalties.

Frequently asked questions

What is the ACA affordability percentage for 2026?

The affordability threshold is 9.96% of household income for plan years beginning in 2026 and 10.22% for plan years beginning in 2027. Employee-only coverage cannot cost more than that share of income to be considered affordable.

Which safe harbor is best for my company?

It depends on your workforce. Rate of Pay works well for stable wages. FPL is simplest but most conservative. W-2 works retrospectively. You can use different safe harbors for different employee classes. Planlined can model all three to find the best fit.

Do dependent premiums count toward affordability?

No. Only employee-only (self-only) coverage counts. Family coverage can cost any amount without affecting affordability compliance for ACA purposes.

What if an employee gets a raise mid-year?

For Rate of Pay safe harbor, use the wage rate at the start of the plan year or coverage period. Mid-year raises don't require premium adjustments unless you choose to recalculate.

How does Planlined help with ACA compliance?

Planlined automatically calculates affordability percentages as you model different contribution strategies. You'll see instant warnings if contributions push employee costs above 9.96%, allowing you to adjust contributions to maintain compliance before presenting to clients.

What records should I keep for ACA affordability?

Maintain: (1) Affordability calculation methodology, (2) Employee-only premium amounts, (3) Safe harbor selection, (4) Wage/salary data supporting calculations, (5) Forms 1095-C. Keep records for at least 6 years.

ACA affordability quick reference, 2026 and 2027

Scroll horizontally to compare all columns →

Get started with ACA affordability calculations

Estimate the contribution limit here, then review employer and employee costs in a Planlined proposal. Keep the plan year and safe-harbor assumptions with your analysis and confirm the applicable rules separately. Start a 7-day free trial with full features.

Official ACA sources

• IRS premium tax credit Q&A — annual affordability percentages, including the 9.96% threshold for 2026.
• IRS employer shared responsibility Q&A — employer mandate, safe harbor, and penalty guidance.
• IRS Bulletin 2025-33 — adjusted 2026 Section 4980H penalty amounts.
• Rev. Proc. 2026-26 — 10.22% affordability percentage for plan years beginning in 2027.
• Rev. Proc. 2026-22 — adjusted 2027 Section 4980H amounts.
• HHS poverty guidelines — the figure the FPL safe harbor is computed from.