This month the IRS released 2027 penalty amounts assessed when applicable large employers (ALEs) - those with at least 50 full-time employees, including full-time equivalent (FTE) employees - fail to comply with coverage and affordability requirements of the Affordable Care Act (ACA).
These penalties are determined based on annual IRS Forms 1094-C and 1095-C, which are filed with the IRS after the end of each calendar year.
4980H(a) penalty
Employers that don’t provide minimum essential coverage (MEC) to at least 95% of eligible employees and their dependents are subject to the 4980H(a) penalty if at least one full-time employee receives subsidized coverage through an ACA Exchange. For 2027, the penalty is $3,780 per full-time employee, calculated based on the employer’s total full-time employee count minus 30.
4980H(b) penalty
Employers that offer MEC to substantially all full-time employees but fail to meet affordability or minimum value requirements may be subject to the 4980H(b) penalty. For 2027, the penalty is $5,670 for each full-time employee who receives subsidized coverage through an ACA Exchange.
Careful planning and knowledge of ACA requirements can eliminate penalty risks. For questions, consult with your Bukaty benefits consultant.
| Year | 4980H(a) penalty amount | 4980H(b) penalty amount |
| 2027 | $3,780 annually / $315 monthly | $5,670 annually / $472.50 monthly |
| 2026 | $3,340 annually / $278.33 monthly | $5,010 annually / $417.50 monthly |
