Using the ACA Affordability Calculators

Affordability calculators for Texas education entities, available in the HR Services Resource Library, can be used to ensure employers offer health coverage that is affordable according to the Affordable Care Act (ACA).

Determining Affordability

The determination of whether insurance is affordable is based on the employee's household income, an amount that includes the employee's take-home pay and income from other sources, such as income earned by family members. Because employers cannot accurately determine an employee’s total household income, the Internal Revenue Service (IRS) provides three safe harbors that employers may rely upon to calculate affordability: the rate of pay safe harbor, the federal poverty level (FPL) safe harbor, and the W-2 safe harbor. HR Services’ affordability calculators use the employee rate of pay for compliance measurement.

The IRS adjusts the affordability threshold annually by considering the ratio of premium growth to income growth in the preceding calendar year. The affordability percentage for plan years beginning in 2025 increased to 9.02 percent. The rates for the last three years were 8.39 percent in 2024, 9.12 in 2023, and 9.61 percent in 2022.

Plan Year Basis

The affordability percentage applies on a plan-year basis. The impact on Texas educational entities is shown below:

• TRS-ActiveCare employers need to use the 2024 percentage (8.39 percent) and premium rates beginning September 1, 2024, to determine affordability for the 2024-2025 plan year. When TRS-ActiveCare premium rates are released for the plan year beginning September 1, 2025, employers will use the 2025 percentage (9.02 percent) to determine affordability.
• Employers with a plan year beginning in January (calendar year) will use the 2025 percentage (9.02 percent) and applicable premium rates to ensure coverage is affordable.
• Employers with a plan year beginning in a different month (e.g., July, October) in 2024, must use the 2024 percentage (8.39 percent) and rates beginning with the first month of the plan for the 2024-2025 plan year.

Using the Calculators

There are two calculators in the HR Services Resource Library — the ACA Affordability Calculator for Texas Schools: September 1 Plan Years and the ACA Affordability Calculator for Texas Schools: Calendar Plan Years (member login required).

Using one of the calculators is an easy way for employers to ensure they comply with the ACA affordability rules. Each calculator will determine the lowest hourly rate a full-time employee can be paid for insurance to be affordable.

The ACA Calculator: September 1 Plan Year references TRS-ActiveCare regional premium rates and allows non-ActiveCare districts to enter the applicable premium rates. For example, an employee working in a Region One district participating in the 2024-2025 TRS-ActiveCare plan who receives the minimum required premium contribution of $225 per month must be paid at least $16.59 per hour.

Calculator Updates

HR Services updates the ACA calculators each year to reflect changes to TRS-ActiveCare premiums and the IRS affordability percentage. These updates are completed and released as soon as the applicable data is available. If you have any questions about using the calculators, please email hrservices@tasb.org, or call 800-580-7782.