The three affordability safe harbors, with the math
Coverage is "affordable" if the employee's required contribution doesn't exceed an indexed percentage of household income. Since employers can't know household income, the IRS lets you use three stand-ins instead. If any one holds for a month, there's no §4980H(b) liability for that month — even if the employee got a premium tax credit.
Form W-2 safe harbor (code 2F)
Formula: the employee's required annual contribution for self-only coverage ≤ indexed % × the employee's Box 1 W-2 wages for the calendar year.
This is the only harbor applied retrospectively on actual wages — it's computed after the year ends, which makes it the natural harbor to check when reconciling a 226-J. If the annual contribution was within the limit, the month would be coded 2F under the form's conventions.
Example (2024): Box 1 wages $40,000 × 8.39% = $3,356 annual limit. An employee paying $100/month ($1,200/year) is well within it.
Rate-of-pay safe harbor (code 2H)
Formula (hourly): monthly contribution ≤ indexed % × hourly rate × 130 hours.
Formula (salaried): monthly contribution ≤ indexed % × monthly salary.
Use the rate in effect on the first day of the coverage period. For hourly workers the 130-hour figure is fixed by regulation — not the employee's actual hours.
Example (2024): $20/hour × 130 × 8.39% = $218.14/month limit. A $100/month contribution qualifies.
Federal poverty line safe harbor (code 2G)
Formula: monthly contribution ≤ indexed % × mainland single-person FPL ÷ 12.
The simplest harbor — one number for the whole workforce. Employers may use the FPL guidelines in effect within six months before the first day of the plan year, so confirm which guideline year your plan year maps to.
Example (2024): 8.39% × $15,060 ÷ 12 = $105.29/month limit.
Year-by-year tables
The indexed percentage is set annually by IRS Revenue Procedure under §36B. FPL figures are the HHS poverty guidelines (mainland, single-person household).
| Plan year | Indexed % | FPL (single) | FPL harbor monthly limit | IRS source |
|---|---|---|---|---|
| 2020 | 9.78% | $12,760 | $103.99 | Rev. Proc. 2019-29 |
| 2021 | 9.83% | $12,880 | $105.51 | Rev. Proc. 2020-36 |
| 2022 | 9.61% | $13,590 | $108.83 | Rev. Proc. 2021-36 |
| 2023 | 9.12% | $14,580 | $110.81 | Rev. Proc. 2022-38 |
| 2024 | 8.39% | $15,060 | $105.29 | Rev. Proc. 2023-29 |
| 2025 | 9.02% | $15,650 | $117.64 | Rev. Proc. 2024-35 |
Percentages per the cited IRS Revenue Procedures (§36B indexing). FPL figures per HHS/ASPE poverty guidelines. Monthly limits are computed as shown — verify against the sources for your plan year. Note the 2020 FPL figure ($12,760) is the guideline for that year; the engine's built-in table covers 2021–2025 and flags other years.
What to attach as evidence
- 2F (W-2): Forms W-2 (Box 1) for the tax year + payroll register showing the self-only contribution.
- 2H (rate of pay): pay-rate records (hourly rate or monthly salary in effect) + contribution schedule.
- 2G (FPL): the HHS guideline table for the applicable year + contribution schedule.
Remember the 14765's invitation: when the IRS marks a month XF/XG/XH (safe harbor claimed but rejected), provide the computation with the written response. A one-page worksheet per harbor beats a paragraph of argument.
This guide is general information, not legal or tax advice. Harbor definitions per IRS — Minimum value and affordability and the 1094-C/1095-C instructions.