--- title: "ACA Affordability 2024: Compliance Guide" description: Ensure your small business meets ACA affordability in 2024. 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By [Jeanette Coleman, SPHR & SHRM-SCP](https://blog.axcethr.com/author/jeanette-coleman) on [Jul 12, 2024](https://blog.axcethr.com/is-your-companys-health-insurance-affordable-if-not-aca-penalties-may-await-you) 5 min read [0 comment(s)](https://blog.axcethr.com/is-your-companys-health-insurance-affordable-if-not-aca-penalties-may-await-you#comments-listing) Share this: - - - - [whatsapp://send?text=https://blog.axcethr.com/is-your-companys-health-insurance-affordable-if-not-aca-penalties-may-await-you](whatsapp://send?text=https://blog.axcethr.com/is-your-companys-health-insurance-affordable-if-not-aca-penalties-may-await-you) - [mailto:?subject=ACA%20Affordability%202024:%20Compliance%20Guide&body=https://blog.axcethr.com/is-your-companys-health-insurance-affordable-if-not-aca-penalties-may-await-you](mailto:?subject=ACA%20Affordability%202024:%20Compliance%20Guide&body=https://blog.axcethr.com/is-your-companys-health-insurance-affordable-if-not-aca-penalties-may-await-you) ![ACA-affordability-2024 (1)](https://blog.axcethr.com/hs-fs/hubfs/ACA-affordability-2024%20(1).webp?width=1200&height=800&name=ACA-affordability-2024%20(1).webp) Did you know failing to meet ACA affordability in 2024 could cost your business thousands of dollars in penalties? For businesses with an average of 50 or more full-time and full-time equivalent employees, also known as applicable large employers (ALEs), ensuring employee health insurance offerings meet the Affordable Care Act (ACA) affordability standards is crucial.   With the new ACA affordability percentage for 2024, it's essential to understand what this means for your business, how to remain compliant and the penalties for non-compliance. This guide will help you navigate these changes and show how partnering with a professional employer organization (PEO), like Axcet HR Solutions, can support your efforts. RELATED: [A Closer Look at the Small Business Health Insurance Options >>](https://blog.axcethr.com/small-business-health-insurance-options) ## What Is the 2024 ACA Affordability Percentage? The ACA mandates that ALEs offer affordable health insurance to at least 95% of full-time employees (and their dependents) that is both affordable and meets minimum essential coverage standards – or face a potential penalty.  The 2024 ACA affordability percentage is a critical component of this requirement and can change annually based on inflation and economic conditions. The 2024 ACA affordability percentage has decreased to 8.39% of an employee's household income. This means the employee's contribution for self-only coverage should not exceed 8.39% of the employee’s household income for the taxable year.  Because employers have no actual way to calculate an employee’s household income, the IRS provides three affordability safe harbors: ### W-2 Safe Harbor Use the employee’s wages from Box 1 of their W-2 form. Under this method, the monthly premium for self-only coverage must not exceed 8.39% of the employee's W-2 Box 1 wage. ### Rate of Pay Safe Harbor This method uses an employee’s regular rate of pay to gauge affordability. To qualify, the monthly premium for self-only coverage must not exceed 8.39% of either: - The employee's lowest hourly rate of pay multiplied by 130 hours OR - The employee's monthly salary (as long as it wasn't reduced during the year) ### Federal Poverty Line Safe Harbor This method uses the federal poverty line for a single individual. For 2024, the employee’s share cannot exceed 8.39% of the federal poverty line, or $15,060 ($105.29 per month).  It’s important to note that employers are permitted to use the federal poverty guidelines in effect six months prior to the beginning of the plan year to calculate affordability.  So, affordability calculation under the Federal Poverty Line Safe Harbor may be completed in two different ways:  - For calendar year plans, the prior year’s poverty line may be used, and  - For non-calendar year plans, the current poverty line is used ## [![New call-to-action](https://no-cache.hubspot.com/cta/default/2652187/dcfd7e6a-2593-42d8-be9c-5c8492d41d3c.png)](https://cta-redirect.hubspot.com/cta/redirect/2652187/dcfd7e6a-2593-42d8-be9c-5c8492d41d3c)Penalties for Non-Compliance with ACA Affordability Guidelines ALEs who fail to offer minimum essential coverage to at least 95% of their full-time employees and their dependents, offer coverage that is not affordable or fail to provide minimum value may be subject to penalties.  For 2024, [the penalties include](https://www.irs.gov/pub/irs-drop/rp-23-17.pdf): ### 4980H(a) Penalty - #### Employers subject to penalty Employers who fail to provide minimum essential coverage to at least 95% of their full-time employees and their dependent children AND at least one full-time employee received a premium tax credit or cost-sharing subsidy in the federal or state Marketplace.  - #### Monthly penalty for not offering coverage $2,970 divided by 12, times the number of full-time employees (minus up to 30). ### 4980H(b) Penalty - #### Employers subject to penalty Employers who provide coverage to at least 95% of their full-time employees and their dependent children BUT the coverage does not pay at least 60% of the covered health care expenses for a standard population (minimum value) AND at least one full-time employee received a premium tax credit to help pay for coverage on Marketplace. - #### Monthly penalty for not offering coverage that is affordable and provides minimum value $4,460 divided by 12, times the number of employees receiving a premium tax credit that month (up to a maximum of $2,970 divided by 12, times the number of full-time employees (minus up to 30). RELATED: [Small Business Health Insurance Costs - 5 Ways to Save >>](https://blog.axcethr.com/small-business-health-insurance-how-to-manage-costs) ## How to Remain Compliant with ACA Affordability in 2024 To stay compliant, ALEs should: - ### Regularly Review and Adjust Premiums Make sure employee contributions do not exceed the ACA affordability threshold. - ### Document Calculations Keep detailed records of how affordability was determined for each employee. - ### Utilize Safe Harbor Methods Apply one of the three IRS safe harbor methods consistently for all employees. - ### Stay Informed Keep up with any changes in ACA regulations and affordability percentages. [![ftc noncompete ban](https://no-cache.hubspot.com/cta/default/2652187/9018fe75-4a54-4a0e-9cd8-4b88d82fa172.png)](https://cta-redirect.hubspot.com/cta/redirect/2652187/9018fe75-4a54-4a0e-9cd8-4b88d82fa172) ## How a PEO, Like Axcet HR Solutions, Can Help Navigating ACA compliance can be complex, but partnering with a PEO like Axcet HR Solutions offers significant advantages: ### Expertise Axcet’s HR professionals are well-versed in ACA regulations and can help ensure your business remains compliant. ### Variety of Plans At Axcet, we partner with United Healthcare and other major carriers to offer a broad portfolio of health plans, providing you with unparalleled options and flexibility.  ### Administrative Support Axcet handles all plan administration including paperwork, renewals, plan selection and administrative tasks, allowing you to remain compliant while focusing on running your business. ### Cost Savings As a [certified PEO](https://blog.axcethr.com/cpeo-vs-peo-how-a-certified-peo-protects-and-safeguards-your-business?__hstc=225150538.12a2b5c1d2ed83647db29c74b4f27fc0.1670596506466.1718913820729.1719242800188.194&__hssc=225150538.2.1719242800188&__hsfp=3128848649), we pool our clients’ employees into a single group to create bargaining power with insurance providers, giving smaller companies access to better coverage at lower rates. As an ALE, ensuring your business' health insurance meets ACA affordability for 2024 is crucial to avoid penalties and remain compliant. By understanding the 2024 ACA affordability percentage, calculating affordability correctly and taking advantage of the expertise and resources offered by a PEO like Axcet HR Solutions, you can protect your business and provide valuable benefits to your employees. [![PEO Health Insurance & Employee Benefits](https://no-cache.hubspot.com/cta/default/2652187/interactive-184585319203.png)](https://blog.axcethr.com/hs/cta/wi/redirect?encryptedPayload=AVxigLJqf6MTe844BQnyt4TpQGwQGDq%2BoNpLuVxeJacDEqBYxThHUCVY1Hnjpd1m9qGFkuUI9yjSGJGy6LKvEYJVf784bS7oGa%2BkUoF2UOZzrVkZMpfHbzupoM41GQPxO3zvTl6%2FJJVJCVAeS92Bm4SlrfnXGEEmIwXcGCUkvoAkr3%2BYttqIBAU7CUc9rauMQpZZajVcGlVPFC0j2FU4Iv8kD%2BnGqtn3MhutDMTLBfpPBl7NthDr06zyFCysPudJH%2FJvQWO0atkZAVTRyl8W3ZhKqETBRQRGexQ92HzoqmNbKWfRUQ%3D%3D&webInteractiveContentId=184585319203&portalId=2652187) ## Stay ACA Compliant and Avoid Costly Penalties Failing to meet ACA affordability standards in 2024 could expose your business to thousands in penalties—but you don’t have to navigate it alone. As a certified PEO, Axcet HR Solutions helps applicable large employers simplify ACA compliance, optimize [employee benefits](https://www.axcethr.com/services/employee-benefits/) plans, and protect their bottom line. From safe harbor calculations to full benefits administration, our experts handle the details so you can stay focused on your business. **Let’s make ACA compliance easy.** [Schedule a consultation with Axcet today »](https://www.axcethr.com/schedule-consultation/) [![Subscribe now](https://no-cache.hubspot.com/cta/default/2652187/3ce89456-4e5b-4313-96c5-66d3f47eacba.png)](https://cta-redirect.hubspot.com/cta/redirect/2652187/3ce89456-4e5b-4313-96c5-66d3f47eacba) [![Jeanette Coleman, SPHR & SHRM-SCP](https://blog.axcethr.com/hs-fs/hubfs/Jeanette-04.jpg?width=80&height=80&name=Jeanette-04.jpg)](https://blog.axcethr.com/author/jeanette-coleman) Written by #### [Jeanette Coleman, SPHR & SHRM-SCP](https://blog.axcethr.com/author/jeanette-coleman) Jeanette Coleman, SPHR, SHRM-SCP, is the Director of Human Resources at Axcet HR Solutions, where she has contributed her expertise for over 21 years. As a leader in the HR industry, she holds advanced certifications as a Senior Professional in Human Resources (SPHR) and SHRM-Senior Certified Professional (SHRM-SCP). Jeanette oversees HR strategy and operations, ensuring Axcet delivers exceptional HR services that help small and mid-sized businesses stay compliant and grow. With a Master’s degree in Human Resource Management from Keller Graduate School and a Bachelor of Science in Business Administration from Kansas State University, Jeanette is well-equipped to lead and support clients in navigating complex HR challenges. Throughout her 15-year tenure as Director of Human Resources, she has been instrumental in positioning Axcet as the Midwest’s largest and premier Professional Employer Organization (PEO). Her previous roles at Axcet include Director of Employee Benefits and Senior HR Consultant, where she gained extensive experience in HR outsourcing, and employee risk management. Jeanette’s expertise has been recognized through industry and regional publications. She co-authored the article “High-Touch in the Age of High-Tech: How PEOs Can Embrace AI Without Losing Their Humanity” (https://peoinsider.org/articles/high-touch-in-the-age-of-high-tech-how-peos-can-embrace-ai-without-losing-their-humanity/) for PEO Insider (March 2026), alongside Jo McClure, and was featured in Ingram’s Magazine in a Q&A (https://ingrams.com/article/qa-with-jeanette-coleman/) discussing generational change, technology, and workplace culture. These contributions reflect her perspective on balancing innovation with the human side of HR. Jeanette’s leadership reflects her deep commitment to helping businesses thrive through strategic, compliance-driven HR solutions. Through her writing, she shares insights on HR strategy, compliance, and best practices to help employers confidently manage their workforce. Published in: PEO Insider and Ingram's Read more [View all posts →](https://blog.axcethr.com/author/jeanette-coleman) ### Get HR Updates ### Table of Contents ### Related Resources - [services Small Business Health Insurance](https://www.axcethr.com/services/employee-benefits/) - [services Human Resources](https://www.axcethr.com/services/human-resources/) #### [Recognizing the Signs Someone Is Suicidal: A Guide for Employers ![signs someone is suicidal](https://blog.axcethr.com/hubfs/signs-someone-is-suicidal-_1200-x-628-px_%20(1).webp)](https://blog.axcethr.com/signs-someone-is-suicidal-at-work) #### [![suicide at work](https://blog.axcethr.com/hubfs/suicide-in-the-workplace-_1200-x-628-px_%20(1).webp) Suicide at Work: Navigating the Complex Issue of Employee Well-Being](https://blog.axcethr.com/suicide-at-work-importance-of-mental-health-initiatives) ## Let us know what you think... ![AxcetHR Blog](https://blog.axcethr.com/hubfs/AxcetHR2021%20Blog/axcethr_logo_white%20(1).png) - [Why Axcet](https://www.axcethr.com/why-axcet/) - [What We Stand For](https://www.axcethr.com/about-us/what-we-stand-for/) - [Expertise](https://www.axcethr.com/expertise/) - [Employee Benefits](https://www.axcethr.com/services/employee-benefits/) - [Human Resources](https://www.axcethr.com/services/human-resources/) - [Payroll Services](https://www.axcethr.com/services/payroll-and-tax-administration-services/) - [Risk Management](https://www.axcethr.com/services/workers-comp-and-employee-safety-risk-management/) - [Meet the Team](https://www.axcethr.com/about-us/meet-the-team/) - [Subscribe to Latest Resources](https://www.axcethr.com/subscribe-to-the-latest-resources/) - [Resource Library](https://www.axcethr.com/expertise/resource-library/) - [\[ Client Portal \]](https://www.axcethr.com/client-services/) - - - - - Search for: Copyright © 2023 Axcet HR Solutions – Kansas City's PEO Since 1988 | [Privacy Policy](https://www.axcethr.com/privacy-policy/) | [Terms and Conditions](https://www.axcethr.com/terms-conditions/) | [**Join our Team – Careers »**](https://axcethrsolutions.prismhr-hire.com/) 10975 Grandview Drive Suite 200, Corporate Woods Building 27, Overland Park, KS 66210 | Call us: 913-383-2999 *The IRS does not endorse any particular For more information on [certified professional employer organizations](https://www.axcethr.com/why-axcet/certified-peo/), go to [www.irs.gov](https://www.irs.gov).* Remove cookies ![](https://dc.ads.linkedin.com/collect/?pid=43031&fmt=gif) ```json { "@context" : "https://schema.org", "@type" : "BlogPosting", "author" : { "@type" : "Person", "name" : "Jeanette Coleman, SPHR & SHRM-SCP", "url" : "https://blog.axcethr.com/author/jeanette-coleman" }, "dateModified" : "2025-05-02T14:27:31.239Z", "datePublished" : "2024-07-12T15:00:00.000Z", "headline" : "ACA Affordability 2024: Compliance Guide", "image" : [ "https://blog.axcethr.com/hubfs/ACA-affordability-2024-_1_%20(1).webp" ], "mainEntityOfPage" : { "@id" : "https://blog.axcethr.com/is-your-companys-health-insurance-affordable-if-not-aca-penalties-may-await-you", "@type" : "WebPage" }, "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject", "url" : "https://blog.axcethr.com/hubfs/_logo_axcethr_primary.png" }, "name" : "Axcet HR Solutions" } } ``` ```json { "@context" : "https://schema.org", "@id" : "https://www.axcethr.com/#organization", "@type" : "Organization", "address" : { "@type" : "PostalAddress", "addressCountry" : "US", "addressLocality" : "Kansas City", "addressRegion" : "MO" }, "aggregateRating" : { "@type" : "AggregateRating", "bestRating" : "5", "ratingValue" : "5", "reviewCount" : "100" }, "areaServed" : { "@type" : "Country", "name" : "United States" }, "award" : [ "IRS Certified Professional Employer Organization (CPEO)", "Award-Winning HR Solutions Provider", "SHRM Certified HR Professionals", "HRCI Certified HR Professionals" ], "contactPoint" : { "@type" : "ContactPoint", "areaServed" : "US", "availableLanguage" : "English", "contactType" : "Customer Service" }, "description" : "Award-winning Professional Employer Organization (PEO) providing comprehensive HR solutions, payroll services, employee benefits, and risk management to small and mid-sized businesses. 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For businesses with an average of 50 or more full-time and full-time equivalent employees, also known as applicable large employers (ALEs), ensuring employee health insurance offerings meet the Affordable Care Act (ACA) affordability standards is crucial. With the new ACA affordability percentage for 2024, it's essential to understand what this means for your business, how to remain compliant and the penalties for non-compliance. This guide will help you navigate these changes and show how partnering with a professional employer organization (PEO), like Axcet HR Solutions, can support your efforts. RELATED: A Closer Look at the Small Business Health Insurance Options >> What Is the 2024 ACA Affordability Percentage? The ACA mandates that ALEs offer affordable health insurance to at least 95% of full-time employees (and their dependents) that is both affordable and meets minimum essential coverage standards – or face a potential penalty. The 2024 ACA affordability percentage is a critical component of this requirement and can change annually based on inflation and economic conditions. The 2024 ACA affordability percentage has decreased to 8.39% of an employee's household income. This means the employee's contribution for self-only coverage should not exceed 8.39% of the employee’s household income for the taxable year. Because employers have no actual way to calculate an employee’s household income, the IRS provides three affordability safe harbors: W-2 Safe Harbor Use the employee’s wages from Box 1 of their W-2 form. Under this method, the monthly premium for self-only coverage must not exceed 8.39% of the employee's W-2 Box 1 wage. Rate of Pay Safe Harbor This method uses an employee’s regular rate of pay to gauge affordability. To qualify, the monthly premium for self-only coverage must not exceed 8.39% of either: The employee's lowest hourly rate of pay multiplied by 130 hours OR The employee's monthly salary (as long as it wasn't reduced during the year) Federal Poverty Line Safe Harbor This method uses the federal poverty line for a single individual. For 2024, the employee’s share cannot exceed 8.39% of the federal poverty line, or $15,060 ($105.29 per month). It’s important to note that employers are permitted to use the federal poverty guidelines in effect six months prior to the beginning of the plan year to calculate affordability. So, affordability calculation under the Federal Poverty Line Safe Harbor may be completed in two different ways: For calendar year plans, the prior year’s poverty line may be used, and For non-calendar year plans, the current poverty line is used Penalties for Non-Compliance with ACA Affordability Guidelines ALEs who fail to offer minimum essential coverage to at least 95% of their full-time employees and their dependents, offer coverage that is not affordable or fail to provide minimum value may be subject to penalties. For 2024, the penalties include: 4980H(a) Penalty Employers subject to penalty Employers who fail to provide minimum essential coverage to at least 95% of their full-time employees and their dependent children AND at least one full-time employee received a premium tax credit or cost-sharing subsidy in the federal or state Marketplace. Monthly penalty for not offering coverage $2,970 divided by 12, times the number of full-time employees (minus up to 30). 4980H(b) Penalty Employers subject to penalty Employers who provide coverage to at least 95% of their full-time employees and their dependent children BUT the coverage does not pay at least 60% of the covered health care expenses for a standard population (minimum value) AND at least one full-time employee received a premium tax credit to help pay for coverage on Marketplace. Monthly penalty for not offering coverage that is affordable and provides minimum value $4,460 divided by 12, times the number of employees receiving a premium tax credit that month (up to a maximum of $2,970 divided by 12, times the number of full-time employees (minus up to 30). RELATED: Small Business Health Insurance Costs - 5 Ways to Save >> How to Remain Compliant with ACA Affordability in 2024 To stay compliant, ALEs should: Regularly Review and Adjust Premiums Make sure employee contributions do not exceed the ACA affordability threshold. Document Calculations Keep detailed records of how affordability was determined for each employee. Utilize Safe Harbor Methods Apply one of the three IRS safe harbor methods consistently for all employees. Stay Informed Keep up with any changes in ACA regulations and affordability percentages. How a PEO, Like Axcet HR Solutions, Can Help Navigating ACA compliance can be complex, but partnering with a PEO like Axcet HR Solutions offers significant advantages: Expertise Axcet’s HR professionals are well-versed in ACA regulations and can help ensure your business remains compliant. Variety of Plans At Axcet, we partner with United Healthcare and other major carriers to offer a broad portfolio of health plans, providing you with unparalleled options and flexibility. Administrative Support Axcet handles all plan administration including paperwork, renewals, plan selection and administrative tasks, allowing you to remain compliant while focusing on running your business. Cost Savings As a certified PEO, we pool our clients’ employees into a single group to create bargaining power with insurance providers, giving smaller companies access to better coverage at lower rates. As an ALE, ensuring your business' health insurance meets ACA affordability for 2024 is crucial to avoid penalties and remain compliant. By understanding the 2024 ACA affordability percentage, calculating affordability correctly and taking advantage of the expertise and resources offered by a PEO like Axcet HR Solutions, you can protect your business and provide valuable benefits to your employees. Stay ACA Compliant and Avoid Costly Penalties Failing to meet ACA affordability standards in 2024 could expose your business to thousands in penalties—but you don’t have to navigate it alone. As a certified PEO, Axcet HR Solutions helps applicable large employers simplify ACA compliance, optimize employee benefits plans, and protect their bottom line. From safe harbor calculations to full benefits administration, our experts handle the details so you can stay focused on your business. Let’s make ACA compliance easy. Schedule a consultation with Axcet today »", "author" : { "@id" : "https://blog.axcethr.com/author/jeanette-coleman#author", "@type" : "Person", "name" : "Jeanette Coleman, SPHR & SHRM-SCP", "url" : "https://blog.axcethr.com/author/jeanette-coleman" }, "dateCreated" : "2024-07-12", "dateModified" : "2025-05-02", "datePublished" : "2024-07-12", "description" : "Did you know failing to meet ACA affordability in 2024 could cost your business thousands of dollars in penalties? 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