IRS Releases 2027 ACA
Pay-or-Play Penalties
The IRS recently announced 2027 ACA pay-or-play penalty amounts. For 2027, the adjusted “A” penalty will increase to $3,780 (up from $3,340 in 2026) and the adjusted “B” penalty will increase to $5,670 (up from $5,010 for 2026). ACA pay-or-play penalties are adjusted annually based on inflation figures, and increased inflation has led to larger than average increases.
Under the ACA, employers with 50 or more full-time (or full-time equivalent) employees must provide full-time employees and their dependents with access to affordable, minimum-value health coverage or risk a potential penalty. The employer may be faced with a penalty under subsection A or B of the ACA penalty provisions if at least one full-time employee receives a subsidy for coverage in the Exchange.
The A penalty is applicable to employers who do not offer minimum essential coverage to substantially all of their full-time employees, and at least one full-time employee obtains a subsidy in the Exchange. The A penalty is calculated based on the total number of full-time employees, even if only one employee receives a subsidy. For 2027, the monthly penalty will be one-twelfth of $3,780 times the number of full-time employees minus 30.
The larger B penalty applies to an employer who has offered minimum essential coverage (even if not affordable or minimum value) to substantially all of its employees and is calculated based on the number of full-time employees who receive a subsidy. For 2027, the monthly penalty will be one-twelfth of $5,670 times the number of subsidized employees.
