The Internal Revenue Service has announced that the so-called “pay or play” penalty levels under the Affordable Care Act (ACA) will increase by 13.2% in 2027. The ACA requires that employers pay penalties if their employees qualify for ACA premium subsidies. Penalties increased by 15.2% in 2026.
One penalty will increase to $3,780, up from $3,340 this year and $2,000 in 2010. That penalty applies to large employers that do not offer minimum essential coverage to at least 95% of their full-time employees. If an employee qualifies for premium tax credit subsidies after purchasing health coverage from the ACA marketplace, then the employer may have to pay the penalty.
The other penalty will increase to $5,670, up from $5,010 this year and $2,000 in 2010. Employers may face a penalty if they fail to offer full-time employees affordable coverage with a minimum value.
Increases in the ACA penalty levels for inflation are based on data from the National Health Expenditure Accounts. The increases in penalty levels are supposed to reflect overall increases in healthcare costs.
The current administration has not ruled out changing the employer penalty system or how the IRS enforces ACA requirements. However, policymakers could also raise penalty amounts to boost government revenue.
HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 470-571-1007.
