Two penalties. Only one of them is catastrophic.
At 50 or more full-time employees, counting equivalents, the ACA employer mandate applies. It carries two different penalties, triggered by two different failures, and they are not remotely the same size. Enter your numbers and see what each one would cost for 2026 or 2027.
Enter your workforce and what you offer.
The (a) penalty is for not offering coverage widely enough. The (b) penalty is for offering coverage that fails affordability or minimum value for a particular employee.
Set up look-back measurement periods for variable-hour staff →
IRS amounts per year: 3,340 dollars for (a) and 5,010 dollars for (b) in 2026; 3,780 and 5,670 dollars in 2027.
Employees averaging 30 or more hours a week, or 130 hours a month.
Part-time hours in a month divided by 120. These count toward the 50 but are never penalized. The full-time equivalent calculator works it out.
The test is 95 percent, or all but five full-time employees if that is greater.
Not sure? Test it with the affordability calculator.
Employees who buy Marketplace coverage with a subsidy instead of taking yours. One is enough to trigger the (a) penalty.
Employer Mandate Exposure
$0
Assumes the same facts in every month of the year; the penalty is assessed month by month. It is not tax deductible, and in a controlled group the 30-employee reduction is shared across the group. The IRS proposes it on Letter 226-J, well after the year it covers. General information, not tax advice.
Same law, very different arithmetic.
The (a) Penalty
Triggered when coverage is not offered to at least 95 percent of full-time employees and their children, and at least one full-time employee receives a premium tax credit. The charge then runs on every full-time employee minus the first 30, not only on the person who triggered it.
The (b) Penalty
Applies when coverage is offered but is unaffordable or lacks minimum value for a particular employee, and that employee receives a premium tax credit. It is charged only for those employees, and it can never exceed what the (a) penalty would have been.
Why the Gap Is So Wide
At 60 full-time employees in 2026, one subsidized employee under (a) costs 30 times 3,340 dollars, or 100,200 dollars for the year. Three subsidized employees under (b) cost 15,030 dollars. The failure that triggers (a) is usually a counting error, not a decision.
Where these penalties actually come from.
Very few employers choose to pay either one. The exposure usually arrives through a miscount, a stale contribution or a reporting code.
Count Full-Time Correctly
Variable-hour and seasonal employees are where the 95 percent test is usually missed. A look-back measurement period decides who is full-time before the year starts, so nobody is discovered to be full-time after the fact.
Test Affordability Every Year
The percentage is 9.96 for 2026 plan years and 10.22 for 2027. It is measured against the employee cost of the cheapest self-only plan that meets minimum value, so a small change in contribution can move a plan across the line.
Keep the 1095-C Codes Clean
The IRS finds penalties by matching Forms 1094-C and 1095-C against Marketplace subsidies. A wrong offer code can produce a penalty letter for coverage you actually offered, and the paperwork to undo it costs far more than getting the code right.
Answer a Letter 226-J on Time
The letter proposes the amount and gives a short window to respond, usually 30 days. Most successful responses rest on records that already exist: offer dates, measurement periods and the safe harbor used for affordability.
Test your affordability → · Count your full-time equivalents → · ACA reporting in detail →
What employers ask about the employer mandate.
How much is the ACA employer mandate penalty for 2026?
The (a) penalty is 3,340 dollars a year for each full-time employee, minus the first 30. The (b) penalty is 5,010 dollars a year for each full-time employee who receives a premium tax credit, capped at the (a) amount. For 2027 the figures rise to 3,780 and 5,670 dollars.
Does the employer mandate apply to us?
It applies if you averaged 50 or more full-time employees, including full-time equivalents from part-time hours, during the prior calendar year. Related companies under common ownership are counted together for that test.
Can one employee trigger a penalty for the whole company?
Under (a), yes. If coverage is not offered to at least 95 percent of full-time employees, one full-time employee receiving a premium tax credit triggers a charge on the entire full-time workforce minus 30.
Is the employer mandate penalty tax deductible?
No. The employer shared responsibility payment is not deductible, so its real cost to the business is higher than the figure on the letter.
Send us your renewal.
We’ll tell you whether it looks competitive, where we see opportunity, and the five questions we’d put to your carrier. No cost, and no obligation to move anything.
The renewal letter
Your current plan summary
Contribution split by tier
Enrolled counts by tier
Four documents — two more if your group is 50 or more. Nothing else; every extra one is a reason to postpone.
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