Household income is unknowable, so the rules give you three safe harbors.
Because an employer cannot know an employee’s household income, the rules allow three safe harbors: W-2 wages, rate of pay and the federal poverty line. Choosing among them is a real decision.
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Three ways to test the same thing.
What Is Actually True
The W-2 safe harbor uses box 1 wages and is tested after the year, which makes it hard to plan around for hourly workers. The rate-of-pay safe harbor uses the hourly rate. The poverty line safe harbor uses a fixed number.
Each gives a different answer for the same caregiver, and the agency can use one for a defined group of employees if applied consistently.
What We Do About It
We run your caregivers through each safe harbor and show which one gives the most room, and which is easiest to administer.
We document the choice so the same method is applied each year and across each group.
From three methods to one documented choice.
What We Need
Wage tiers and whether wages vary during the year.
What We Do
We compare the safe harbors and recommend one.
What You Get
A documented choice and the contribution limits it produces.
Questions on this topic.
Short answers for agency owners.
Can we use different safe harbors for different caregivers?
Employers may apply them to reasonable categories of employees, consistently. We help you define the categories.
Which one is easiest for hourly workers?
Often rate of pay, since it works from the hourly wage. We confirm it fits your case.
Do we have to choose in advance?
Yes, the method should be chosen and applied consistently rather than picked after the fact.
General information, not legal or tax advice. Confirm the rules that apply to your agency with your attorney or tax advisor.
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We’ll tell you whether it looks competitive, where we see opportunity, and the five questions we’d put to your carrier. No cost, and no obligation to move anything.
The renewal letter
Your current plan summary
Contribution split by tier
Enrolled counts by tier
Four documents, two more if your group is 50 or more. Nothing else; every extra one is a reason to postpone.
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