How to use ACAwise's ICHRA Affordability Calculator to find out how much to offer for your ICHRA to be affordable?
170 views | 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. 

  1. Annual salary if the employee is paid a fixed salary
  2. 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

ICHRA affordability calculator


Step 2: Choose the Employee’s State Code from the dropdown.

ICHRA affordability calculator

Step 3: Choose the Employee’s county name from the dropdown.

ICHRA affordability calculator for employers


Step 4: Choose the Employee’s Zipcode from the dropdown.

ICHRA affordability calculator

Step 5: Select the Employee’s Age as of January 1, 2020, from the drop-down.

Individual Coverage Reimbursement Arrangement Affordability calculator

Step 6: Select the pay type of employee.

ICHRA affordability calculator


6. (a). If selected paid hourly, enter the employee’s hourly rate. For example, $15

ICHRA affordability calculator


6. (b). If you selected a Paid salary type, you must enter the employee’s annual salary amount.  For example, $120000

ICHRA affordability calculator

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.

ICHRA affordability calculator


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. 

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