How to use ACAwise's ICHRA Affordability Calculator to find out how much to offer for your ICHRA to be affordable?
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Last modified 1/28/2021 7:55:44 AM EST |
Added by ACAwise Team
Under the Affordable Care Act, Applicable Large Employers (ALE) with over 50 full-time equivalent employees, are subject to the ACA requirement to provide affordable health insurance (sometimes called the "corporate mandate") to employees.
Employers (ALE) who choose to offer ICHRA (Individual Coverage Health Reimbursement Arrangement) to their full-time equivalent employees must provide an affordable HRA in order to avoid penalties from the IRS.
ICHRA affordability
To determine the amount you should offer your employees for the ICHRA to be deemed affordable for each employee, you can use our ICHRA affordability calculator. This helps you instantly determine how much you need to offer your ICHRA affordable for each employee.
Please note: You can also download our ICHRA bulk upload template if you want to simultaneously determine the ICHRA affordability for all your employees.
Here’s how you can use ACAwise’s ICHRA Affordability Calculator to determine how much to offer for your ICHRA to be deemed affordable.
Information to use
- Reporting year
The coverage year you want you to calculate the ICHRA affordability.
- Employee’s state Code
It can either be the employee’s employment state code or primary residence state code, depending on the safe harbor you choose.
- Employee’s county name
It can either be the employee’s employment county name or primary residence county name, depending on the safe harbor you choose.
- Employee’s Zipcode
It can either be the employee’s work location Zipcode or primary residence location Zip code, depending on the safe harbor you choose.
- Employee’s Age
You must know the employee’s age as of January 1, 2020.
- Employee’s pay type
You must know whether the employee is paid hourly (variable) or fixed salary type.
- Employee’s household Income
You must know the employee’s income.
- Annual salary if the employee is paid a fixed salary
- Hourly rate, if the employee is paid hourly.
Determine ICHRA Affordability
Once you have the information to use in the ACAwise’s ICHRA Affordability Calculator, here’s what you need to do:
Step 1: Select the Tax year you want to calculate the ICHRA affordability for
Step 2: Choose the Employee’s State Code from the dropdown.
Step 3: Choose the Employee’s county name from the dropdown.
Step 4: Choose the Employee’s Zipcode from the dropdown.
Step 5: Select the Employee’s Age as of January 1, 2020, from the drop-down.
Step 6: Select the pay type of employee.
6. (a). If selected paid hourly, enter the employee’s hourly rate. For example, $15
6. (b). If you selected a Paid salary type, you must enter the employee’s annual salary amount. For example, $120000
Step 7: Finally, click on Get My ICHRA Affordability Contribution to know your result.
Result
You will get the ICHRA affordability results based on the Lowest Cost Silver Plan (LCSP) premium available for the employees where they live or work.
Please note: For employees that receive an annual salary, we will calculate affordability using the "W-2 Wages" or "Federal Poverty Line" safe harbors. You may choose either one!
For employees that receive hourly pay, we will calculate affordability using the "Rate of Pay" or "Federal Poverty Line" safe harbors. You may choose either one!
Get the ICHRA Affordability Report
To get the ICHRA affordability report sent to your email for future reference, enter the valid information in the provided box. This helps us send your results via email instantly.
If your ICHRA is affordable, employees will NOT be eligible for tax credits (PTC).
If it's unaffordable, the employee can either accept the HRA or opt-out of the HRA (one-time a year) and accept Premium Tax Credits. As an ALE, you must offer an affordable ICHRA to avoid penalties.
So, choose our ICHRA Affordability Calculator to instantly determine how much you need to offer for your ICHRA to be affordable for each employee.