The employer mandate penalties and affordability

There are two employer shared responsibility paymentsBenefitsEmployer shared responsibility paymentWhat an ALE owes the IRS when a full-time employee gets a premium tax credit on the Marketplace: under §4980H(a), for not offering coverage to 95% of full-time employees, $3,340 a year for 2026 per full-time employee minus 30; under §4980H(b), for coverage that was unaffordable or not minimum value, $5,010 a year for 2026 per credited employee, capped at the (a) amount, and an ALEBenefitsApplicable large employerAn employer that averaged at least 50 full-time employees, full-time equivalents included, over the prior calendar year — the employers the ACA's employer mandate and Form 1095-C reporting apply to. Companies under common control are counted together owes at most one of them for a month. Neither is triggered by the employer alone: each needs at least one full-time employee to enroll in a Marketplace plan with a premium tax credit.

AffordableBenefitsACA affordabilityThe test of whether an employer's cheapest self-only coverage is affordable: the employee's contribution may not exceed a percentage of household income — 9.96% for plan years beginning in 2026 — which employers measure through the W-2, rate-of-pay or federal poverty line safe harbor means the employee's share of the cheapest self-only option is no more than 9.96% of household income for plan years beginning in 2026. An employer cannot see household income, so it tests against one of three safe harbors instead: the employee's Form W-2 wages, their rate of pay, or the federal poverty line.