W-2 Wages Safe Harbor

If an employer satisfies the requirements for this Safe Harbor, their insurance coverage offering will be considered affordable under the employer mandate.

Who should use the W-2 Wages Safe Harbor?

This safe harbor may be most useful to an employer with full-time employees who regularly work 40 hours per week and whose compensation is unlikely to decrease during the year.

How to use the W-2 Wages Safe Harbor

Refer to Box 1 of an employee’s current year W-2 form. If the employee’s health coverage premium is not more than:

  • 9 .83% for plan years beginning in 2021
  • 9 .78% for plan years beginning in 2020
  • 9 .86% for plan years beginning in 2019
  • 9 .56% for plan years beginning in 2018
of Box 1, your coverage is considered affordable under the employer mandate.

Disadvantages of W-2 Wages Safe Harbor

This safe harbor counts only earned wages, and does not permit an employer to impute income that would have been earned had they not taken a leave of absence. Box 1 income does not include pre-tax contributions, which will reduce the maximum affordable amount; this must be calculated monthly for every employee in your company. For more information, please click here.


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