Three steps on one page: are you an applicable large employer, does your employee contribution pass an IRS safe harbor for a given plan year, and what could a 4980H payment cost. Every number runs in your browser, the formulas are shown, and each IRS figure links to the Revenue Procedure that sets it.
The employer mandate (Internal Revenue Code section 4980H) applies only to employers that averaged 50 or more full-time employees, counting full-time equivalents, in the prior calendar year. Enter an average month.
This tests one month. The IRS test averages all 12 months of the prior calendar year, counts related employers under common control as one employer, and has a seasonal-worker exception when the workforce exceeds 50 for 120 days or fewer. Run the step once per month and average the totals.
Enter the employee's monthly cost for your lowest-cost self-only plan that provides minimum value, pick the plan year, and see the result under the W-2, rate of pay and federal poverty line safe harbors.
A safe harbor protects against a 4980H(b) payment only. An employer may use one only if it offers its full-time employees and their dependents the opportunity to enroll in coverage that provides minimum value (26 CFR 54.4980H-5(e)(2)). The W-2 test can be applied only after the year ends, so the W-2 line here is a planning estimate. For an ICHRA offer the affordability test is different, see the ICHRA affordability calculator.
An estimate of the two annual payment amounts for a full-year scenario, using the IRS figure for the year you pick.
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Under 50 full-time employees? Read what changes below the ALE line, or run the two-minute ICHRA fit check.
An employer is an ALE for a calendar year when it averaged at least 50 full-time employees, counting full-time equivalents, during the prior calendar year. Full-time means at least 30 hours of service per week or 130 hours in a month. Part-time hours convert to FTEs at 120 hours each, capped at 120 hours per employee.
The IRS gives one example: an employer with 40 full-time employees and 20 employees working 60 hours each has 50 full-time equivalents for the month (40 plus 1,200 / 120 = 10). The test adds the monthly full-time and FTE counts for the whole prior year and divides by 12. A result that is not a whole number is rounded down, so 49.9 is below the line. Businesses under common ownership are combined, which is how a company with 30 employees can still be an ALE.
The IRS set the required contribution percentage at 9.96% for plan years beginning in 2026 and 10.22% for 2027. Coverage counts as affordable for 4980H(b) when the employee's cost for the lowest-cost self-only plan that provides minimum value stays at or below that percentage of income under a safe harbor. The percentage changes every year; the table lists each one with the Revenue Procedure that set it.
| Plan year | Required contribution % | IRS source | Poverty line used (single) |
|---|---|---|---|
| 2015 | 9.56% | Rev. Proc. 2014-37 | $11,670 |
| 2016 | 9.66% | Rev. Proc. 2014-62 | $11,770 |
| 2017 | 9.69% | Rev. Proc. 2016-24 | $11,880 |
| 2018 | 9.56% | Rev. Proc. 2017-36 | $12,060 |
| 2019 | 9.86% | Rev. Proc. 2018-34 | $12,140 |
| 2020 | 9.78% | Rev. Proc. 2019-29 | $12,490 |
| 2021 | 9.83% | Rev. Proc. 2020-36 | $12,760 |
| 2022 | 9.61% | Rev. Proc. 2021-36 | $12,880 |
| 2023 | 9.12% | Rev. Proc. 2022-34 | $13,590 |
| 2024 | 8.39% | Rev. Proc. 2023-29 | $14,580 |
| 2025 | 9.02% | Rev. Proc. 2024-35 | $15,060 |
| 2026 | 9.96% | Rev. Proc. 2025-25 | $15,650 |
| 2027 | 10.22% | Rev. Proc. 2026-26 | $15,960 |
The last column is the poverty guideline for one person in the 48 contiguous states and DC from the year before the plan year. The regulation lets an employer choose any guideline in effect within six months before the first day of the plan year, and a calendar-year plan starting January 1 falls in that window for the prior year's guideline. Alaska and Hawaii have their own guidelines.
The three safe harbors. Each is a monthly cap on the employee's share of the lowest-cost self-only coverage:
For 2026, the 4980H(a) amount is $3,340 per full-time employee after the first 30, and the 4980H(b) amount is $5,010 per full-time employee who receives a premium tax credit. For 2027 the amounts are $3,780 and $5,670. The statute sets the base figures at $2,000 and $3,000 and the IRS indexes them each year.
A 4980H(a) payment applies when an ALE does not offer coverage to at least 95% of its full-time employees and their dependents and at least one full-time employee receives a premium tax credit. A 4980H(b) payment applies when the offer is made but is unaffordable or lacks minimum value, and it is capped at the 4980H(a) figure. Both are computed monthly.
| Year | 4980H(a) per employee | 4980H(b) per employee | IRS source |
|---|---|---|---|
| 2019 | $2,500 | $3,750 | IRS ESRP page |
| 2020 | $2,570 | $3,860 | IRS ESRP page |
| 2021 | $2,700 | $4,060 | IRS ESRP page |
| 2022 | $2,750 | $4,120 | IRS ESRP page |
| 2023 | $2,880 | $4,320 | IRS ESRP page |
| 2024 | $2,970 | $4,460 | Rev. Proc. 2023-17 |
| 2025 | $2,900 | $4,350 | Rev. Proc. 2024-14 |
| 2026 | $3,340 | $5,010 | Rev. Proc. 2025-26 |
| 2027 | $3,780 | $5,670 | Rev. Proc. 2026-22 |
Years before 2019 are not listed because the figures were not confirmed against an IRS source for this page.
No. The employer shared responsibility provisions apply only to applicable large employers, those averaging at least 50 full-time employees including FTEs in the prior calendar year. A smaller employer pays nothing under 4980H whatever it offers. What it offers can still change whether its employees qualify for a premium tax credit, which is covered in ICHRA for a small business under 50 employees.
InsureICHRA designs and runs Individual Coverage HRAs for employers nationwide. We are not a law firm or an accounting firm, and this calculator is an estimate, not legal or tax advice. We are paid when an employer we advise puts an ICHRA in place and their people enroll through our licensed agent partners. We have no affiliation with the IRS, CMS, HHS or the DOL.
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