ACA Employer Mandate 2026
Confirmed 2026 penalty amounts, affordability thresholds, and compliance requirements for Applicable Large Employers under IRC §4980H.
2026 key figures
4980H(a) penalty — no offer
$3,340/yr
$278.33/mo per FTE (minus first 30)
4980H(b) penalty — inadequate offer
$5,010/yr
$417.50/mo per subsidized employee
Affordability threshold (W-2 safe harbor)
9.96%
of employee's W-2 wages for employee-only premium
ALE threshold
50+ FTEs
Full-time equivalent employees in prior calendar year
Understanding the two penalties
4980H(a) — "No offer" penalty
Triggered when an ALE fails to offer minimum essential coverage (MEC) to at least 95% of full-time employees and their dependents
2026 rate: $3,340 per full-time employee per year (minus the first 30 employees), or $278.33 per month.
Example: An employer with 200 full-time employees who fails to offer MEC faces a potential annual penalty of (200 − 30) × $3,340 = $567,800.
Trigger: At least one full-time employee receives a premium tax credit through the marketplace. The penalty applies even if only one employee gets a subsidy.
4980H(b) — "Inadequate offer" penalty
Triggered when coverage is offered to 95%+ of FT employees but is not minimum value or not affordable
2026 rate: $5,010 per subsidized employee per year, or $417.50 per month. Capped at the 4980H(a) amount.
Example: An employer with 200 FT employees where 10 employees receive marketplace subsidies faces a potential annual penalty of 10 × $5,010 = $50,100.
Trigger: Each full-time employee who receives a premium tax credit through the marketplace. Penalty is per subsidized employee, not per total headcount.
2026 affordability safe harbors
Coverage is "affordable" if the employee-only premium does not exceed the applicable percentage of the employee's household income. Because household income is unknown to employers, the IRS provides three safe harbors based on information employers do have.
W-2 safe harbor
9.96%Employee-only premium ≤ 9.96% of the employee's W-2 Box 1 wages for the calendar year. Most commonly used — W-2 wages are readily available.
Use prior year W-2 wages for prospective planning.
Rate of pay safe harbor
9.96%Employee-only premium ≤ 9.96% of (hourly rate × 130 hours) for hourly employees, or 9.96% of monthly salary for salaried employees.
Cannot be used if an employee's hourly rate is reduced during the year.
Federal poverty line (FPL) safe harbor
9.96%Employee-only premium ≤ 9.96% of the federal poverty line for a single individual. Simplest to administer — one calculation applies to all employees.
2026 FPL for a single individual: $15,060 (48 contiguous states). Maximum monthly premium under FPL safe harbor: $124.90.
2026 ALE compliance checklist
Key 2026 deadlines
| Deadline | Requirement |
|---|---|
| Jan 31, 2026 | Furnish Form 1095-C to employees (for 2025 plan year) |
| Feb 28, 2026 | Paper filing deadline for Forms 1094-C / 1095-C (for 2025 plan year) |
| Mar 31, 2026 | Electronic filing deadline for Forms 1094-C / 1095-C (for 2025 plan year) |
| Jul 31, 2026 | PCORI fee due (Form 720) for plan years ending in 2025 |
| Dec 31, 2026 | End of 2026 plan year — document ALE status for 2027 determination |