ACA Affordability
Safe Harbor Guide
An ALE can offer coverage and still face an ESRP if the offer isn’t affordable or isn’t coded correctly. This workbook helps you calculate, test, code, and document all three safe harbors before the IRS asks.
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Received a Letter 226-J? The 226-J Response Guide covers what to do when an affordability failure triggers an IRS notice.
📄 Get the 226-J Response Guide →Full Table of Contents
- 1
What ACA Affordability Means
LCSO-MV rule, why offers still fail, three-year threshold reference table.
- 2
W-2 Safe Harbor Worksheet
Full-year and partial-year formulas, 8-step worksheet, pass/fail examples.
- 3
Rate of Pay Safe Harbor
Hourly and salaried methods, separate worksheets, pay-reduction failure scenario.
- 4
Federal Poverty Line Safe Harbor
Formula, FPL timing rule, Alaska/Hawaii guidance, wrong-table-year failure example.
- 5
Safe Harbor Comparison Guide
Nine-dimension comparison, best-fit by workforce type.
- 6
Lines 14, 15, and 16 Coding Guide
Safe harbor codes (2F/2G/2H), full coding matrix, common mistakes.
- 7
Common Failure Scenarios
Five failure cards covering the highest-risk affordability errors.
- 8
Documentation & Sign-Off Checklists
Records retention, calculation checklist, cross-functional sign-off grid.
- 9
Pre-226-J Affordability Audit
Nine-step audit table, 226-J response readiness checklist.
- 10
Authoritative Sources
13 cited IRS sources and Rev. Procs. with live links.
Pairs with the 226-J Response Guide and the AIR Error Codes Guide.
Built for Practitioners
HR Directors and Benefits Admins
Run the worksheets, select the right safe harbor, and build a defensible documentation file.
Payroll Managers
Understand how deductions translate to Line 15 and what rate changes do to your safe harbor position.
CFOs and Finance Teams
Model § 4980H(b) exposure and understand the cost tradeoffs between the three safe harbors.
Tax and ERISA Counsel
Reference 26 CFR § 54.4980H-5 with practitioner notes on common safe harbor failures.
Need Help Running the Affordability Analysis?
Our team handles affordability testing, safe harbor selection, 1095-C coding, and 226-J penalty defense across all three safe harbors.
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