The 4980H(b) penalty: $5,010 per employee who receives a premium tax credit.
If coverage is offered but is unaffordable, fails minimum value, or is not offered to an employee who receives a premium tax credit, the 2026 payment is $5,010 for each such employee, capped at the 4980H(a) amount.
When the payment applies.
Offer Made but Inadequate
The employer meets the 95% test, but coverage is unaffordable or does not provide minimum value for a full-time employee.
A Credit Is Received
The employee receives a premium tax credit because the offer fell short.
The 2026 Amount
$5,010 per such employee, per Rev. Proc. 2025-26.
How the payment is computed.
Only Employees Who Receive Credits
Unlike 4980H(a), the payment counts only the employees who actually receive credits.
Capped at the (a) Amount
The total cannot exceed what 4980H(a) would have cost for that employer.
Affordability Matters
Affordability is tested against the lowest-priced self-only option that meets minimum value, using a safe harbor. For 2027 plan years the percentage is 10.22%.
Reporting Supports the Defense
Accurate Form 1095-C codes are how an employer shows what it offered and what it charged.
Quick answers.
Short answers. This is general information, not legal or tax advice.
What Is the Affordability Percentage?
9.96% for plan years beginning in 2026 and 10.22% for 2027, per IRS guidance.
Can We Use a Safe Harbor?
Yes. W-2 Box 1, rate of pay and the federal poverty line are the available safe harbors.
Does Late Filing Raise This Penalty?
No, but a missing record makes it harder to contest a Letter 226-J.
Where the rules and figures come from.
Each figure on this page comes from the source below. Amounts are indexed or updated over time, so confirm current figures before relying on them.
IRS Employer Shared Responsibility
Letter 226-J, Letter 227 and the employer mandate overview.
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