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The IRS considers a plan to be affordable to an employee If the employee’s share of the premium for employer-provided coverage would cost the employee no more than 9.69% for 2017 (will be lowered to 9.56% in 2018) of that employee’s annual household income. Because household income will be difficult to determine for the employer, the IRS has provided the ability to use the three safe harbors of W2, rate of pay, and federal poverty line for determining affordability.


Employers can select an ACA > Affordability > Safe Harbor to use for any given classification of employee. The employer should determine the appropriate safe harbor to use and then select that safe harbor on this screen. Then, the module will use these safe harbor selections to determine the appropriate output for Line 16 Safe Harbor Code of the 1095-C.


If the employer wishes to choose different safe harbors to use for different categories of employees, they can do so by selecting the appropriate categories under Eligibilities. Then, add an additional affordability rule by clicking Actions > Add Policy.



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The Safe Harbors list shows a table of all employees in the system as well as indicators for whether each safe harbor is met for each employee. Specifically, the module determines the lowest cost plan for each employee and then determines affordability of that plan according to the following rules:



  • The W2 Safe Harbor uses the W2 Earnings field found on the Employee > Profile > Employment page and considers a plan affordable if the employee is not required to contribute more than 9.69% (for 2017) of his W-2 wages on the premium for single health insurance coverage.


  • The Rate of Pay Safe Harbor uses the Compensation field found on the Employee > Profile > Employment page and considers a plan affordable if the employee is not required to contribute more than 9.69% of his monthly wages on the premium for single health insurance coverage.


  • The Federal Poverty Line Safe Harbor is based solely off the rate of the plan and considers a plan affordable if the employee is not required to contribute more than 9.69% of the federal poverty level for the year on the premium for single health insurance coverage. 



The Safe Harbor Affordability results can be viewed for each stability period by entering the start date in the Stability Period Date field.  

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