Under the ACA’s employer mandate, Applicable Large Employers (ALEs) must offer affordable, minimum value health coverage to full-time employees. Failure to comply can result in one of two penalties:
💥 4980H(a) Penalty – “No Offer” Penalty
Applies if the employer fails to offer coverage to at least 95% of full-time employees and at least one receives a subsidy on the Marketplace.
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2025 Penalty: $2,900 per full-time employee (after excluding the first 30)
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Assessed on all full-time employees, not just those who get subsidies
🧮 Example:
(100 – 30) Ă— $2,900 = $203,000
💥 4980H(b) Penalty – “Unaffordable or Low-Value” Penalty
Applies if the employer offers coverage that is not affordable or lacks minimum value, and at least one employee gets a subsidy.
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2025 Penalty: $4,350 per year per subsidized full-time employee
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Assessed only on those employees who receive subsidies
🧮 Example:
10 employees Ă— $4,350 = $43,500
🧠Quick Recap:
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4980H(a) = $2,900 Ă— (total FTEs minus 30), if no coverage is offered to 95%
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4980H(b) = $4,350 Ă— subsidized employees, if coverage is offered but not adequate