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Reviewing affordability information

The employee affordability analysis report is a list of your employees with an assessment determining healthcare affordability by month for the current stability period.

This monthly assessment reviews the lowest cost employee-only benefit plan, as defined during setup, and compares it to the employee's wages from payroll history. Next, the system applies one of the three safe harbor methods (affordability tests) to determine if the plan is affordable to your employees. You can set the safe harbor method you want for calculation purposes on the Setup > Employer/Benefits window.

Using the Affordability analysis report

You can use the Affordability analysis report (My Workforce Analyzer > Analysis > Affordability) to review the assessment of your employees' healthcare affordability for each month of the period selected. 

The following information is listed at the top of the page for informational purposes:

  • The applicable ACA regulatory period
  • The safe harbor method used in the assessment (that you selected on the Employer/Benefits setup window)
  • The name of the healthcare benefit plan assessed for affordability

You use the report to do the following:

  • Filter information by Employee status (Active, Terminated, All, and so on).
  • Quickly view if healthcare is affordable for all employees. Note the following:
    • Coverage months are red when the analysis determines healthcare is not affordable.
    • Months with N/A are not applicable for assessment (such as when the employee has no payroll history).
    • When an employee is terminated, the month of termination is not assessed (N/A).
  • Export or print the information displayed.

  • View a detailed Affordability analysis for each employee. More...

    When you click on a row in the Affordability report, the Affordability analysis detail window opens for that employee. Depending on the safe harbor method selected, you will see the following columns of information:

    • Month. Each month in the current stability period is represented.
    • Rate of pay/Box 1 wages/Federal poverty level. The safe harbor method used to determine affordability and the related value.
      • If Rate of pay is selected, this column displays the employee's hourly pay rate.
      • If Box 1 wages is selected, this column displays the employee's taxable wages for that month.
      • If Federal poverty level is selected, this column displays the actual federal poverty level for that year and month as determined by the IRS.
    • Max(imum) contribution %. Represents the percentage (determined by the IRS each year) of the maximum amount an employee's contribution can be, in relationship to the safe harbor test.
    • Affordable contribution. Based on the safe harbor method selected and the maximum contribution percentage, this is the actual assessed affordable employee contribution for a self-only healthcare plan.
    • Comparison to the lowest cost plan. Displays if the assessed affordable contribution is equal to, greater, or less than your company's lowest cost employee-only healthcare plan amount.
    • Affordable?  Displays yes or no. If there is no information for that month, the system displays N/A (not applicable).

    • Tip: Click on an employee row to open the detail view.

My Workforce Analyzer uses payroll information from your Sage program (and imported data), then determines if the healthcare plan is affordable to each individual employee by applying one of three safe harbor tests.

Because these calculations are performed and reported for each month, the analysis isn't complete until the employee is paid and payroll history is updated in My Workforce Analyzer for the entire month. This means that if you have another pay period in the month, the analysis may determine the healthcare plan is not affordable (for that month) when you view the report. This analysis could change after the employee is paid again during the month.

This test uses the employee's taxable wages (as reported in box 1 of Form W-2), and calculates the maximum contribution amount (based on the annual percentage from the IRS) from the employee's wages to determine if the employee-only healthcare plan is affordable. For example...

After each pay period, the system updates and appends the box 1 wages amounts for each employee paid and each applicable month. When pay periods runs into the next month, the system calculates Box 1 Wages. More...

To calculate taxable wages for pay periods that are in more than one calendar month, My Workforce Analyzer uses the following information:

  1. The number of days in the pay period
  2. The number of days in the pay period that fall in each month

  3. The employee's taxable wages (as reported in box 1 of the W-2) for the pay period

    Calculation: Divide the days in B by the days in A then multiply by C.

    For example, consider a full-time employee whose pay period is November 22 to December 5:

    A. Number of days in pay period 14
    B. Number of days per month November = 9, December = 5
    C. Employee's taxable wages for the pay period $816.05
    November Box 1 Wages: (A/B x C) $524.60
    December Box 1 Wages: (A/B x C) $291.45

This test uses the employee's rate of pay from your payroll history, multiplies it by 130 (full-time hours for the calendar month, in accordance with IRS regulations), then calculates the maximum contribution amount (based on the annual percentage from the IRS) to determine if the employee-only healthcare plan is affordable. My Workforce Analyzer uses the lowest rate of pay for any payroll period that has a payroll period end date within the calculated month. For example...

This test uses the annual federal poverty level and no actual employee data, then calculates the maximum contribution amount (based on the annual percentage from the IRS) to determine if the employee-only healthcare plan (from your system) is affordable. For example...