To meet the ACA Affordability requirements, the employee contribution for a plan’s minimum-cost, single-only coverage must not exceed 9.83% of their household income. You can use three calculations methods to determine whether or not a plan meets this 9.83% threshold:


Rate of Pay Safe Harbor: An employee’s contribution for lowest-cost, self-only coverage does not exceed 9.83% of their rate of pay as of the 1st day of coverage.


  • To calculate if coverage is affordable for the 2021 tax year under the Rate of Pay Safe Harbor and using hourly workers earnings, take the employee’s lowest hourly rate as of the first day of the coverage period and multiply that rate by 130 (130 is the minimum total of hours on a monthly basis required for an employee to be treated as full-time under the ACA). Take that product and multiply it by the 2021 affordability threshold, 9.83%. This will identify the maximum monthly premium that the employee may be required to pay to satisfy 2021 ACA affordability. Take, for example, $20/hr x 130 hours x 9.83% = maximum monthly premium of $255.58. For this particular situation, to claim the Rate of Pay Safe Harbor using hourly wages, the monthly contribution cannot exceed $255.58.


For a salaried employee, take the monthly salary as of the first date of the coverage period and multiply it by the appropriate affordability percentage for the year. Again, for 2021 the ACA affordability threshold is 9.83%. Here’s an example: $2,000 monthly salary x 9.83% = maximum monthly premium of $196.60 to claim the Rate of Pay Safe Harbor. 


W-2 Safe Harbor: An employee’s contribution for lowest-cost, self-only coverage does not exceed 9.83% of the total reported in Box 1 of their W-2 form.

Federal Poverty Level (FPL) Safe Harbor: An employee’s contribution for lowest-cost, self-only coverage does not exceed 9.83% of the federal poverty level.

  • For 2021, plans will be considered affordable under the FPL safe harbor if the employer offers at least one plan where the employee cost for self-only coverage is less than 9.83% of the FPL. Since HHS publishes the FPL for each year during the January/February timeframe, calendar year plans that start before that year’s FPL figures are released can rely on FPL amounts from the prior year. Therefore, the dollar amount that meets the FPL safe harbor can differ depending on a plan year’s start date:


    For calendar year plans beginning in 2021, the FPL safe harbor is met if the employer offers at least one plan where the employee cost for self-only coverage is less than $104.52 (9.83% of 2020’s FPL of $12,760/12 months).

    For non-calendar year plans beginning in 2021, the FPL safe harbor is met if the employer offers at least one plan where the employee cost for self-only coverage is less than $105.51 (9.83% of 2021’s FPL of $12,880/12 months).


For more information, see the IRS resource on Minimum Value and Affordability.