Employee Navigator- ACA Filing- Assigning Safe Harbors for Affordability

A health plan is considered affordable for an employee if the employee's required contribution does not exceed 9.02% of the employee's household income. Because it is difficult to know an employee's household income, employers are able to use three safe harbors to determine affordability. It is important to note that safe harbors must be applied consistently to a reasonable grouping of employees.  You can access the Assign Safe Harbor tool from ACA>>>Assign Safe Harbors.

W-2 safe harbor: The W-2 safe harbor uses the employee’s annual W-2 wages (Box 1 value) and treats coverage as affordable if the employee contribution for the year does not exceed 9.02% of the W-2 value.  This safe harbor is applied by calendar year, not by plan year. 

• When assigning the  W-2 Safe Harbor, be sure that there is a previous year's W-2 value in the employee's profile. For the 2025 reporting year, you need to use the employee's 2024 W-2 Box 1 value, which needs to be populated in this field.  If this value is not in the employee's profile, the W-2 Safe Harbor cannot be assigned.
  • You can find this value under the employees Profile>>>Compensation>>>Reporting Year W2 Earnings. You are able to import this value using a census template and the column header Reporting Year W2 earnings. 

Rate of Pay safe harbor: The Rate of Pay safe harbor uses the employee’s rate of pay and treats coverage as affordable if the employee contribution for the year does not exceed 9.02% of the employee's rate of pay. 

• When assigning the Rate of Pay Safe Harbor, be sure that an annual base salary has been added for this employee. If this value is not in the employee's profile, the Rate of Pay Safe Harbor cannot be assigned. Either an hourly rate or annual base salary can be used in the calculation. If both an hourly rate and annual base salary have been added for the employee, we will use the hourly rate for the calculation. Employees eligible for this safe harbor whose yearly cost of coverage (monthly employee class-based cost x 12) divided by their salary or salary equivalent (excluding employees who have a $0 salary since we can't divide by 0) is less than 8.39%.
  • You can find the salary information of an employee under the employee's Profile>>>Compensation.

Federal Poverty Line safe harbor: The Federal Poverty Line safe harbor uses the federal poverty line for the year and treats coverage as affordable if the employee contribution for the year does not exceed 9.02% (2025 affordability percentage) of the federal poverty line value.  This means that if the cost of coverage per month for the 2025 reporting year for the employee does not exceed $113.20 per month, then the FPL applies.

Expectation for plans that start mid- year:

• The federal poverty level applies to the plan year, not to the calendar year. NOTE: The W2 safe harbor applies to the calendar year (all of the current reporting year).

Remember, some codes trump other codes. When 1A is populated on line 14, no value or code is needed for lines 15 or 16 because the 1A means the employee received a qualifying offer that was affordable. When an employee accepts an unaffordable offer and enrolls in the plan, a 2C is generated for line 16, so no safe harbor code is needed – the employee accepted the unaffordability and enrolled. Safe harbor codes for line 16 will only be populated if applicable, when the following unaffordable codes are populated for line 14: 1B, 1C, 1D, 1E, 1J, or 1K.