The Affordable Care Act (ACA) creates compliance responsibilities for applicable large employers (ALEs). As healthcare costs and regulatory requirements evolve, so do the potential penalties for employers that fail to offer affordable, compliant health coverage to eligible employees.
2027 ACA penalties
For the 2027 reporting year, ACA penalty amounts have increased. ALE's may face two types of penalties.
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4980H(a) Penalty – Failure to Offer Coverage
Employers that do not offer minimum essential coverage (MEC) to at least 95% of their full-time employees and their dependents may face a penalty of $3,780 per full-time employee (adjusted annually for inflation). This penalty is calculated based on the number of full-time employees, excluding the first 30 employees.
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4980H(a) Penalty – Coverage That Is Not Affordable or Does Not Provide Minimum Value
Employers that offer coverage but fail to meet ACA affordability or minimum value requirements may face a penalty of $5,670 per full-time employee who receives a premium tax credit through the Marketplace.
Even employers that offer robust benefit plans can face exposure if eligibility tracking, affordability calculations or reporting processes are not managed correctly.
Common ACA compliance challenges
ACA compliance requires more than simply offering a health plan. Employers must maintain accurate employee classification, monitor hours worked, track eligibility, and complete annual reporting requirements.
Common areas where employers encounter challenges include
- misclassifying full-time employees or variable-hour employees,
- failing to monitor employees who become eligible for benefits,
- incorrect affordability calculations,
- inaccurate Form 1094-C and 1095-C reporting, and
- inconsistent documentation of eligibility and enrollment decisions.
How employers can reduce ACA penalty risk
A proactive approach to ACA compliance helps employers stay ahead of changing requirements and avoid unnecessary exposure.
- Review employee eligibility processes. Employers should regularly evaluate how they track hours, determine full-time status, and identify employees who must be offered coverage.
- Confirm affordability compliance. Employers should review employee contribution strategies each year to ensure coverage remains affordable under current ACA guidelines.
- Maintain accurate records. Consistent documentation of employee status offers of coverage, waivers, and enrollment information is essential if compliance questions arise. Past information returns should be retained for at least four years.
- Leverage technology and expert support. Benefit administration platforms can help streamline ACA reporting, improve data accuracy, and identify potential issues before they become costly problems. Our secure, intuitive platform, Employee Navigator, assists employers in ACA compliance.
Impacted employers cannot afford to take a reactive approach to ACA compliance. By combining accurate data management, effective benefit administration and ongoing oversight, organizations can reduce the risk of penalties.
At Bukaty Companies, we help employers simplify complex benefit compliance requirements through strategic guidance, technology solutions and dedicated support. Our team works alongside employers to improve benefit administration and strengthen compliance practices. To learn more, connect with us today.
