ACA Affordability Calculator for Applicable Large Employers

To help Applicable Large Employers (ALEs) determine if their plans are compliant with the Affordable Care Act’s Employer Shared Responsibility (ESR) provision, we created a calculator that allows you to determine what you (as the employer) must contribute to be affordable, or what the minimum employee compensation must be to remain compliant.

What is the 2025 Affordability Percentage?

The Affordable Care Act’s Employer Shared Responsibility (ESR) provision requires Applicable Large Employers (ALEs) (Employers with more than 50 full-time equivalents) to offer Affordable Minimum Value Coverage to full-time workers or face potential penalties.

The 2025 Affordability Percentage is 9.02%, an increase from the 2024 percentage of 8.39%.

This means that a group plan sponsor’s lowest monthly priced health plan (if multiple plans are offered) for employee-only coverage cannot exceed 9.02% of an employee’s monthly income they make from that employer.

This provision applies to your organization if:

  • Your organization is considered an ALE in 2024

  • The Employer Mandate will apply to your organization 2025

  • Your organization is required to adhere to ACA Reporting in 2026 for the 2025 plan year

If your group is not an ALE in 2024, this does not apply to you.

For more detailed information on the ACA Affordability Percentage, who it applies to and an ACA Play or Pay Overview, click here.

What does this mean for you?

Given the large increase in the adjusted percentage, employer-sponsored health coverage that wasn’t considered to be affordable prior to 2024 may be considered affordable in the coming year.

The Family Glitch Fix:

The Affordable Care Act (ACA) requires certain employers to make a qualifying offer of health insurance to employees and their dependents, or potentially make an employer-shared responsibility payment to the IRS. A qualifying offer represents benefits that include minimum essential coverage at a minimum value and is affordable for employee-only coverage based on the employee’s income.

The original interpretation of a qualifying offer, clarified in 2013, extended the same qualifying offer to an employee’s dependents. An employee’s total contribution to enroll family members may not be considered affordable based on their household income. Yet, family members were prohibited from applying for a premium tax credit (PTC) on the individual marketplace. This represents the “glitch.” The interpretation is amended as of January 1, 2023.


How to Determine if Your Plan is Affordable

Our “Play or Pay” calculator allows you to determine what you as an employer must contribute to be affordable, or what the minimum employee compensation must be to remain compliant.

See below for examples on how the calculator works to generate correct compensation and contribution figures for affordability.

At Caravus, we believe compliance is key. If you are in need of assistance with determining ACA compliance, please feel free to contact us. We’d be happy to assist you.

Alyssa Johnson