IRS Announces Increased ACA Employer Shared Responsibility Penalties for 2027

The IRS has released updated Affordable Care Act (“ACA”) employer shared responsibility penalty amounts for the 2027 calendar year. The new indexed amounts reflect another increase in potential penalties for applicable large employers (“ALEs”) that fail to comply with ACA employer mandate requirements.

Under the ACA, ALEs, generally employers with 50 or more full-time and full-time equivalent employees, may face penalties if they do not offer qualifying health coverage to eligible full-time employees and their dependents.

For 2027, the IRS adjusted the penalties as follows:

• The Code § 4980H(a) penalty, often referred to as the “A penalty,” will increase to $3,780 per full-time employee, after excluding the first 30 employees. This penalty may apply if an ALE fails to offer minimum essential coverage to at least 95% of its full-time employees and their dependent children, and at least one employee receives subsidized coverage through a Health Insurance Marketplace.
• The Code § 4980H(b) penalty, often referred to as the “B penalty,” will increase to $5,670 per full-time employee who receives subsidized Exchange coverage because the employer’s offered coverage was either not affordable or did not provide minimum value.

These updated amounts represent significant increases from the 2026 penalty levels and highlight the continuing financial exposure associated with ACA compliance failures.

HR and benefits teams should use this as a reminder to review ACA compliance procedures regularly, including:

• Proper identification of full-time employees
• Measurement and tracking of employee hours
• Timely offers of coverage
• Affordability testing under ACA safe harbors
• Verification that plan options continue to meet minimum value requirements
• Accurate ACA reporting and documentation practices

With penalties continuing to rise, maintaining consistent ACA administration and documentation processes remains an important part of reducing compliance risk for employers.

For information about BAS’ ACA data collection and compliance services, contact your account manager or solutions@basusa.com.

Benefit Allocation Systems (BAS) provides best-in-class, online solutions for: Employee Benefits Enrollment; COBRA; Flexible Spending Accounts (FSAs); Health Reimbursement Accounts (HRAs); Leave of Absence Premium Billing (LOA); Affordable Care Act Record Keeping, Compliance & IRS Reporting (ACA); Group Insurance Premium Billing; Property & Casualty Premium Billing; and Payroll Integration.

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This article is for informational purposes only and is not intended as legal, tax, or benefits advice. Readers should not rely on this information for taking (or not taking) any action relating to employment, compliance, or benefits. Always consult with a qualified professional before making decisions based on this content.