ACA Penalty Increase

Posted by BAS - 06 April, 2023

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Failing to offer affordable, minimum essential coverage to full time employees and their dependents now comes with steeper penalties. The IRS has adjusted the dollar amount used to calculate the ACA Employer Shared Responsibility Payment (ESRP) for violations in 2024.

For the 2024 tax year, the 4980H(a) penalty will increase $90 to $2,970 per employee. The IRS assesses an ESRP 4980H(a) penalty when an employer fails to offer minimum essential coverage to at least 95% of its full-time employees for any month of the year and one of those employees obtains a premium tax credit from the Marketplace.

The 4980H(b) penalty will also increase in the 2024 tax year to $4,460 per employee, which is a which is a $140 increase. The 4980(b) penalty is assessed on a per-violation basis.

The 4980H(b) penalty is assessed when an employer offers its full-time employees coverage that was either unaffordable, not minimum value, or both, and one of the full-time employees receives a premium tax credit from the Marketplace.

A copy of the Revenue Procedure with the penalty adjustments may be accessed by clicking here.

Topics: Company News, Health Care Reform (ACA), Affordable Care Act, HR & Benefits News


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