ACA Affordability Calculator
Test 2026 ACA affordability at 9.96% under all three IRS safe harbors: rate of pay, W-2 Box 1, and federal poverty level. Free, instant, no signup.
ACA Affordability Calculator
Safe harbor method
Set rates before the year starts. Best for hourly and variable-hour staff.
Rate of pay inputs
Use the lower of the rate on the first day of the coverage period or the lowest rate paid during the month.
This is never a multiplier. The ceiling always uses 130 hours a month, as 26 CFR 54.4980H-5(e)(2)(iii) requires.
If this employee's monthly salary was reduced at any point during the plan year, including through a cut in hours, you cannot use the rate of pay safe harbor. Use the W-2 or federal poverty level method instead.
Premium and employer size
Optional. Leave it blank to see only the ceiling you are allowed to charge. Never enter the family premium here.
9.96% is the required contribution percentage for plan years beginning in 2026 (Rev. Proc. 2025-25, Section 3.02). Ceilings are floored to the cent.
Employer shared-responsibility exposure
This offer clears the 9.96% safe harbor. Report it on Form 1095-C with the matching safe harbor code in line 16: 2F for W-2, 2H for rate of pay, 2G for the federal poverty level.
The 2026 ACA affordability percentage is 9.96%
Rev. Proc. 2025-25, Section 3.02, set the required contribution percentage at 9.96% for plan years beginning in calendar year 2026, up from 9.02% for 2025. It has never been higher. A higher percentage means employers may charge employees more and still pass the test, which helps employer budgets and costs employees money.
The jump in monthly dollars, under the rate of pay safe harbor:
| Hourly rate | Monthly basis (rate x 130) | 2025 ceiling at 9.02% | 2026 ceiling at 9.96% |
|---|---|---|---|
| $15.00 | $1,950.00 | $175.89 | $194.22 |
| $18.00 | $2,340.00 | $211.06 | $233.06 |
| $22.50 | $2,925.00 | $263.83 | $291.33 |
| $30.00 | $3,900.00 | $351.78 | $388.44 |
Why the regulation says 9.5% and this page says 9.96%. Every safe harbor paragraph in 26 CFR 54.4980H-5(e)(2) is written with a 9.5% figure. That figure is indexed annually to the section 36B(c)(2)(C)(i)(II) required contribution percentage, and the IRS confirmed in Notice 2015-87 that the section 4980H(b) safe harbors use the same indexed percentage as section 36B. Rev. Proc. 2025-25 sets that percentage at 9.96% for 2026, so 9.96% is the number to apply even though the regulation text still reads 9.5%.
One more timing point: the percentage tracks the plan year in which a month falls, not the calendar year. A plan year running July 2025 through June 2026 stays at 9.02% for all twelve of its months, including the ones in 2026. This calculator is scoped to plan years that begin in 2026.
The three safe harbors, and how to pick one
Household income is what the statute actually measures, and no employer knows it. So 26 CFR 54.4980H-5(e)(2) offers three substitutes built from figures an employer does know. You may apply a different safe harbor to different reasonable categories of employees (hourly versus salaried, one location versus another), as long as you apply the choice uniformly and consistently to everyone inside each category.
| Method | What you need | When you know | 1095-C line 16 | Trade-off |
|---|---|---|---|---|
| Rate of pay | Hourly rate, or monthly salary on day one of coverage | Before the plan year starts | 2H | Highest ceiling for well-paid staff; unavailable to a salaried worker whose pay was cut |
| Form W-2 Box 1 | Box 1 wages from this employer | After the year closes | 2F | Verifies only; breaks if the contribution changes mid-year |
| Federal poverty level | Nothing about the employee | Before the plan year starts | 2G | Lowest ceiling, so it costs the most, but it is the only bright line |
The rule most often broken is the 130 hours. Rate of pay uses 130 hours a calendar month for every employee, whatever their real schedule. A part-timer at 20 hours a week gets the same 130 hours, and so does someone working 55 hours a week with overtime. Multiply by actual hours and the ceiling comes out wrong in both directions. Free calculators that ask for hours worked and then use them as a multiplier are making exactly this mistake.
Worked examples for each method
Rate of pay, hourly. An employee earns $18.00 an hour. 18.00 x 130 = $2,340.00 monthly basis. 2,340.00 x 0.0996 = $233.064, floored to the cent, so $233.06 a month, or $2,796.72 a year. Charge $150 a month and you have $83.06 of headroom.
Form W-2 Box 1. A full-year employee has $48,000 in Box 1. The regulation runs on adjusted wages of 48,000 x (12 offered / 12 employed) = $48,000, an annual cap of 48,000 x 0.0996 = $4,780.80, spread across the twelve months in which a contribution is charged: $398.40 a month. If the same person only worked six months, the $48,000 divides over six instead, and the monthly ceiling doubles to $796.80.
Federal poverty level, calendar-year plan. A plan year beginning January 1, 2026 must use the 2025 mainland guideline of $15,650, because the 2026 guidelines were not published until January 15, 2026. 15,650 x 0.0996 = $1,558.74, divided by 12 = $129.895, floored to $129.89 a month. Start that plan on February 1, 2026 instead and the 2026 guideline of $15,960 comes inside the six-month window, giving $132.46.
A failing example. Same $18.00 an hour employee, but the self-only contribution is $310 a month. The ceiling is $233.06, so the offer is over by $76.94 a month. If that employee goes to the marketplace and receives a premium tax credit, the employer is exposed to the section 4980H(b) payment of $5,010 for the year, assessed at $417.50 for each month the situation holds (Rev. Proc. 2025-26). Two such employees for a full year is $10,020.
Mistakes that void a safe harbor
- Testing the family premium instead of the employee-only contribution for the lowest-cost minimum-value plan. This is the single most common error, and it fails the test on numbers that would have passed.
- Using actual hours worked rather than the fixed 130 hours under rate of pay.
- Using rate of pay for a salaried employee whose monthly salary was reduced during the plan year, including through a cut in hours. The safe harbor is simply unavailable there.
- Changing the contribution amount mid-year while relying on the W-2 safe harbor, which requires a consistent amount or a consistent percentage of wages all year.
- Applying the 2026 poverty guideline to a January 1, 2026 plan year. It was published two weeks too late to sit inside the six-month lookback in 26 CFR 54.4980H-1(a)(19).
- Applying 9.96% to a non-calendar plan year that began in 2025. That year stays at 9.02% through its final month.
Affordability is a per-employee, per-month determination, so the wage basis behind it has to be right for each person before the test means anything. Related employer-side tools: the W-2 wage calculator derives the Box 1 figure this test needs, the employer cost of an employee calculator puts the health contribution next to your other per-employee costs, the multi-employee payroll calculator runs the whole team at once, and the SUTA and FUTA employer tax calculator covers the other statutory employer costs. To keep the hourly rates and year-to-date wages behind all of this in one place, the Payroll Calculator app holds per-employee inputs across a full payroll run.
This calculator is an estimate for planning, not tax or legal advice. Affordability, applicable large employer status, and Form 1095-C reporting depend on facts this page does not collect. Check your figures with your benefits advisor or tax professional before you rely on them.
Frequently Asked Questions
Common questions about aca affordability calculator
What is the ACA affordability percentage for 2026?
It is 9.96% of the employee's household income, or of a safe harbor proxy for it. The IRS set that figure in Rev. Proc. 2025-25, Section 3.02, for plan years beginning in calendar year 2026. That is a sharp jump from 9.02% for 2025 and the highest the percentage has ever been, so employers can charge more in 2026 than in 2025 and still clear the test.
What are the three ACA affordability safe harbors?
Rate of pay, Form W-2 Box 1 wages, and the federal poverty level. All three sit in 26 CFR 54.4980H-5(e)(2). An employer cannot know an employee's actual household income, so each safe harbor substitutes a figure the employer does know. You may apply a different safe harbor to different reasonable categories of employees, as long as you apply it uniformly and consistently within each category.
How does the rate of pay safe harbor work?
Multiply the hourly rate by 130 hours, then by 9.96%. At $18.00 an hour that is 18 x 130 x 0.0996, or $233.06 a month. The 130 hours is fixed by regulation and does not move with the employee's actual schedule, not for part-timers and not for overtime. Use the lower of the rate on the first day of the coverage period or the lowest rate paid during the month.
Which federal poverty level do I use for a 2026 plan year?
For a plan year beginning January 1, 2026, use the 2025 guideline of $15,650, which gives a ceiling of $129.89 a month. The 2026 guidelines were not published until January 15, 2026, so they were not in effect within six months before the first day of the plan year, as 26 CFR 54.4980H-1(a)(19) requires. Plan years beginning February 1, 2026 or later may use the 2026 guideline of $15,960, giving $132.46 a month. Alaska and Hawaii have higher guidelines and therefore higher ceilings.
Which safe harbor should an employer use?
The federal poverty level method is the only one that gives a single number covering everyone, and the only one that guarantees the employee cannot claim a premium tax credit, so it is the cleanest defense and it earns the 2G code on Form 1095-C. It is also the lowest ceiling, so it costs the most. Rate of pay is the practical default for hourly workforces because you can set contributions before the plan year begins. W-2 is retrospective and only verifies after the fact, so it is a poor tool for setting rates and it breaks if the contribution amount changes mid-year.
What is the penalty if coverage is not affordable in 2026?
The Section 4980H(b) payment: $5,010 a year, assessed at 1/12 ($417.50) a month, for each full-time employee who actually enrolls in a subsidized marketplace plan (Rev. Proc. 2025-26). It is not charged for employees who simply decline coverage. The separate and much larger Section 4980H(a) penalty, $3,340 a year across every full-time employee minus the first 30, applies only when the employer fails to offer minimum essential coverage to at least 95% of its full-time employees. The employer cost of an employee calculator puts those amounts next to the rest of your per-employee cost.
Does the ACA employer mandate apply to my small business?
Only if you were an applicable large employer: an average of 50 or more full-time employees, including full-time equivalents, during the preceding calendar year. Below that there is no Section 4980H penalty exposure and no affordability requirement. The math is still worth running if you offer an ICHRA, since ICHRA affordability uses the same percentage. To count heads and wages across the team, the multi-employee payroll calculator runs everyone at once.
Is the affordability test based on the family premium?
No. It is always the employee's required contribution for the lowest-cost self-only plan you offer that provides minimum value, even if the employee actually enrolls in family coverage, and even if they picked a richer plan. Using a family premium is the most common way employers compute this wrong.