Using the ACA Affordability Calculators

Editor's note: This article has been updated as of May 2026.

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 2026 percentage (9.96 percent) and premium rates beginning September 1, 2026, to determine affordability for the 2026-2027 plan year.
• Employers with a plan year beginning in January 2026 (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 2026, must use the 2026 percentage (9.96 percent) and rates beginning with the first month of the plan for the 2026-2027 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 2026-2027 TRS-ActiveCare plan who receives the minimum required premium contribution of $225 per month must be paid at least $19.69 per hour for insurance to be affordable.

Considerations for Affordability

With current budget constraints in school districts, school leaders are grappling with how to address the rise in insurance costs. The affordability calculators can help districts assess costs to determine next steps if insurance is not affordable to employees. The simplest options are to either increase the district contribution or to increase the hourly rate of employees. However, these options could be cost prohibitive without further exploration.

District leaders may want to conduct an internal cost analysis to determine how to address insurance affordability with the least amount of budget impact. One strategy could be to consider a tiered approach by raising the contribution for certain employee groups to ensure affordability. This may result in less overall costs for the district to ensure affordability compliance is met. Conversely, the district may want to increase pay rates for those employees most affected by increases in insurance costs.

Creating an intentional and strategic approach to determining affordability can help districts manage their budget while ensuring the district is complying with ACA requirements.

Calculator Updates

HR Services updates the ACA calculators each year to reflect changes to TRS-ActiveCare premiums and the IRS affordability percentage. The most current update is available reflecting the new premium rates published by TRS on May 1, 2026.

The IRS affordability percentage for the upcoming calendar year will be available in late August or early September. The ACA Affordability Calculator for Texas Schools: Calendar Plan Year for plan years beginning on January 1 will be updated at that time.

If you have any questions about using the calculators, please email hrservices@tasb.org, or call 800-580-7782.