Using the ACA Affordability Calculators

Editor's note: This article has been updated to include information for the 2025-2026 school year.

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 2026 is 9.96 percent, up from 9.02 percent in 2025.

Plan Year Basis

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

• TRS-ActiveCare employers must use the 2025 percentage (9.02 percent) and premium rates beginning September 1, 2025, to determine affordability for the 2025-2026 plan year.
• Employers with a plan year beginning in January (calendar year) will use the 2026 threshold percentage (9.96 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 2025, must use the 2025 percentage (9.02 percent) and rates beginning with the first month of the plan for the 2025-2026 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 year and the ACA Affordability Calculator for Texas Schools: Calendar Plan Year (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 2025-2026 TRS-ActiveCare plan who receives the minimum required premium contribution of $225 per month must be paid at least $19.02 per hour for insurance to be affordable.

If insurance is not affordable, the employer has the choice to increase the hourly rate or the district contribution. Increases can be made on an individual basis or for employee groups.

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.