Affordability safe harbors let employers test ACA affordability using W-2 wages, rate of pay, or the federal poverty line instead of an employee’s actual household income, which they cannot see. Meeting any one safe harbor guards against employer mandate penalties.
The FPL safe harbor makes ACA affordability a flat amount: the required self-only contribution can’t exceed 9.96% (for 2026) of the federal poverty line for one person ÷ 12, about $129.90/month for 2026.
The rate-of-pay safe harbor measures ACA affordability using an employee’s hourly rate (× 130 hours) or monthly salary, applying the affordability percentage (9.96% for 2026), without needing to know actual income.
The W-2 safe harbor measures ACA affordability against the employee’s Box 1 W-2 wages: coverage is affordable if the required self-only contribution doesn’t exceed the affordability percentage (9.96% for 2026) of those wages.
The affordability percentage is the maximum share of income an employee’s required self-only contribution can take for ACA coverage to count as “affordable.” For 2026 it is 9.96%.