Short answer: An ALE can face two employer-mandate penalties under IRC §4980H. For 2026 the “no offer” (a) penalty is $3,340 per full-time employee (after excluding the first 30), and the “unaffordable or low-value” (b) penalty is $5,010 per subsidized employee.
Under the ACA’s employer mandate, applicable large employers (ALEs) must offer affordable, minimum-value health coverage to full-time employees. Failure can trigger one of two penalties, and the amounts are indexed each year.
4980H(a): the “no offer” penalty. Applies if the employer fails to offer coverage to at least 95% of full-time employees and at least one full-time employee receives a Marketplace subsidy.
- 2026 amount: $3,340 per full-time employee, after excluding the first 30.
- Assessed on all full-time employees, not just those who receive subsidies.
Example: (100 − 30) × $3,340 = $233,800.
4980H(b): the “unaffordable or low-value” penalty. Applies if the employer offers coverage that is not affordable or lacks minimum value, and at least one employee receives a subsidy.
- 2026 amount: $5,010 per year per subsidized full-time employee.
- Assessed only on the employees who actually receive subsidies.
Example: 10 subsidized employees × $5,010 = $50,100.
The (b) penalty can never exceed what the (a) penalty would have been, so an employer that offers coverage to at least 95% of full-time staff is never worse off than one that offers nothing.