Breaking Down the Math: ACA Affordability for ICHRA (Updated for 2025)

We often get requests for Affordable Care Act (ACA) Affordability analyses. Our team can usually look at an ICHRA funding strategy and know in seconds whether it is affordable. In this article, we walk you through the math shortcuts that make this possible

Before we dive in, let’s set some context. 

‍What are the ICHRA ACA Affordability Thresholds? Why Does It Matter?

Applicable Large Employers (ALE) report each year to the IRS on whether they provide affordable health care coverage. If they don’t do this, they face fines.  

For 2025, the rule is that a lowest-cost silver plan cannot cost more than 9.02% of a household's annual income. 

‍How do I calculate ACA Affordability?

The formula is:

[Lowest Cost Silver Premium] - [Employer ICHRA Contribution] < (Employee’s Annual Income/12 Months) X .0902

Let's do some math.

Example #1: Federal Poverty Line Safe Harbor 

I’m an employee living in Georgia, and I make $15,060 per year. That would put me right at the Federal Poverty Line (FPL) for a single individual. Note: An employee making minimum wage ($7.25/hour) working 40 hours a week will make $15,080 per year. In other words, very few full-time employees will make less than this amount.

($15,060/12) X .0902 = $113.201 per month

Remember this number. It represents IRS’s FPL Safe Harbor. It’s the easiest way to keep track of ACA Affordability because you don’t have to worry about changing incomes throughout the year. You just have to make sure that an employee’s share of a lowest-cost silver plan does not exceed $113.20

Example #2: What if I’m an employee earning $45,000 per year?

At this income level, the employee share of a lowest-cost silver plan cannot exceed $338.25 per month.​

Here’s where it can get complicated. You have to offer all employees within the same “class” the same contribution strategy to meet ICHRA Non-Discrimination Requirements. 

Say you have a younger workforce and nearly everyone is in their twenties. You learn that the monthly cost of the lowest-cost silver plan for a 20-year-old living in Atlanta is $350. Legally, you only need to contribute $11.75 in ICHRA Funding to meet ACA Affordability.

But perhaps you have a few employees in their 50s. That same plan will cost a 50-year-old $597.46, meaning your $10 ICHRA contribution will not meet ACA Affordability for your older workforce (aside from being an extremely uncompetitive benefit offering).  

In these scenarios, we recommend an Age-Based ICHRA Funding Strategy. Using this strategy, you pick a reference plan and set a percentage of that plan's cost to pay (e.g. 75% of a Gold Plan.) Each employee receives the dollar equivalent of 75% of a Gold Plan. This ensures that your whole workforce has the same purchasing power. This approach allows you to more easily meet ACA Affordability Requirements if you have a workforce that is diverse in age.

Example #3: What if I need to meet ACA Affordability, but I don’t want to worry about income, location, or age?

Pro Tip: Offering 100% of the cost of a Lowest Cost Silver Plan for your employees will meet ACA Affordability Requirements 99.9% of the time. 

‍How does Venteur Make Sure Your ICHRA is ACA-compliant?

We conduct an ACA Affordability audit behind the scenes during your onboarding and annual renewal. Have a question about ACA Affordability? Get in touch with the Venteur team for a free compliance review.