Sep 7, 2026Compliance
Where ICHRA Compliance Breaks Down After Launch
ICHRA compliance problems begin after implementation — when employee eligibility, coverage, allowances, and plan records start changing.
ICHRA affordability can affect how an employer’s offer is evaluated under the Affordable Care Act, particularly for Applicable Large Employers.
Before launch, review the information used in the affordability analysis and confirm that the employee and employer contribution data used for the calculation are accurate.
Confirm whether affordability applies to your organization
Affordability is especially important for Applicable Large Employers because the employer shared responsibility provisions under the Affordable Care Act may apply to the coverage offered to full-time employees.
If your organization is not an Applicable Large Employer, affordability analysis may still be useful for benefit design and employee communication, but the employer mandate rules may not apply in the same way.
Review employee information used for affordability
Affordability results can depend on employee-specific information.
Review relevant data such as employee age, work location or residence information where applicable, employment status, and the class or allowance structure used for the ICHRA.
Incorrect or outdated employee information can affect the result of an affordability review.
ICHRA affordability generally considers the employee’s required contribution toward applicable individual health coverage after the employer’s ICHRA contribution is taken into account.
The applicable lowest-cost silver plan premium can vary by age and geographic area, so the benchmark used in an affordability review should correspond to the employee information and plan year being evaluated.
Benchmark premiums can change from one plan year to the next, so affordability should be reviewed again when new plan-year rates become available.
Review employer allowance amounts
Confirm that the monthly allowance used in the affordability analysis matches the contribution structure approved for the employee’s class.
Changes to allowance amounts can affect the affordability result.
For more information about contribution configuration, see Allowances.
Review the affordability methodology
Applicable Large Employers may use certain affordability safe harbors for purposes of the employer shared responsibility provisions.
The three affordability safe harbors are:
W-2 safe harbor — generally uses the employee’s Form W-2 Box 1 wages.
Rate of Pay safe harbor — generally uses the employee’s rate of pay.
Federal poverty line safe harbor — generally uses the applicable federal poverty line amount for a single individual.
An employer may use one or more permitted safe harbors, subject to the applicable rules and consistency requirements. These safe harbors are used for employer shared responsibility purposes and do not determine whether an employee qualifies for a premium tax credit.
Lirvion can support the review of affordability inputs, but the employer remains responsible for determining the approach it uses for compliance purposes.
Review affordability when employee or plan information changes
Affordability is not necessarily a one-time review.
Changes in employee age, location, class assignment, allowance amounts, benchmark premiums, or plan-year assumptions may affect affordability.
Review affordability again when relevant employee or plan information changes and during renewal planning for the next plan year.
Complete your affordability review
Before completing your affordability review, confirm that:
Your organization has considered whether the Applicable Large Employer rules apply.
Employee information used in the analysis is accurate.
The applicable lowest-cost silver plan premium corresponds to the employee and plan year being evaluated.
Employer allowance amounts are correct.
The affordability methodology being used has been reviewed.
Changes that may affect affordability will be reviewed during the plan year and at renewal.
Your team understands that affordability calculations support administrative review and are not a substitute for legal or tax advice.
Once these items are confirmed, your affordability review is complete.
Important: This article provides general administrative information about ICHRA and does not constitute legal, tax, or accounting advice.
Consult your legal, tax, benefits, or other qualified professional regarding affordability requirements and employer shared responsibility obligations applicable to your organization.
