# The employer mandate penalties and affordability

> The §4980H(a) and (b) payments for 2026, how each is triggered and computed, and the 9.96% affordability test.

Source: https://lopifi.com/learn/does-a-startup-have-to-offer-health-insurance/employer-mandate-penalties
Part of: Lopifi — US GAAP books on autopilot, checked by a CPA (https://lopifi.com)

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**What is the ACA employer mandate penalty for 2026?** The §4980H(a) and (b) payments for 2026, how each is triggered and computed, and the 9.96% affordability test.

There are two [employer shared responsibility payments](https://lopifi.com/md/glossary/employer-shared-responsibility-payment), and an [ALE](https://lopifi.com/md/glossary/applicable-large-employer) 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.

| Payment | When | Amount for 2026 |
| --- | --- | --- |
| §4980H(a) | Coverage not offered to at least 95% of full-time employees (and their dependents) | $3,340 a year × (all full-time employees − 30) |
| §4980H(b) | Coverage offered, but unaffordable or not minimum value for an employee who gets a credit | $5,010 a year × each such employee, never more than (a) |

The two payments for 2026, from Rev. Proc. 2025-26.

> “For calendar year 2026, the adjusted $2,000 amount under § 4980H(c)(1) is $3,340 ($2,000 x 1.6726771319 = $3,345.3542638 rounded down to $3,340), and the adjusted $3,000 amount under § 4980H(b)(1) is $5,010 ($3,000 x 1.6726771319 = $5,018.0313957 rounded down to $5,010).”

— [Rev. Proc. 2025-26, §2](https://www.irs.gov/pub/irs-drop/rp-25-26.pdf) (PDF), The 2026 employer shared responsibility payment amounts

— [IRS — Questions and answers on employer shared responsibility provisions, Q5, Q39, Q53–Q54](https://www.irs.gov/affordable-care-act/employers/questions-and-answers-on-employer-shared-responsibility-provisions-under-the-affordable-care-act), How the §4980H(a) and (b) payments work, and the affordability safe harbors

**Scenario — The same company, two ways.** A company with 60 full-time employees offers nothing in 2026 and one employee gets a credit: (60 − 30) × $3,340 = $100,200. Had it offered a plan that was unaffordable to 4 of them, and those 4 got credits, it would owe $20,040 instead.

## Affordable, for 2026

[Affordable](https://lopifi.com/md/glossary/aca-affordability) 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.

> “For plan years beginning in calendar year 2026, the Required Contribution Percentage for purposes of § 36B(c)(2)(C)(i)(II) and § 1.36B-2(c)(3)(v)(C) is 9.96%.”

— [Rev. Proc. 2025-25, §3.02](https://www.irs.gov/pub/irs-drop/rp-25-25.pdf) (PDF), The 2026 affordability percentage

**Northwind — Is Northwind's plan affordable?.** Northwind's employees pay $162.50 a month for employee-only cover. For someone earning $3,500 a month, 9.96% is $348.60, so the plan is affordable with $186.10 to spare. Northwind is not an ALE, so nothing turns on it today — but the test is worth running before the company is.

## Where this page's rules come from

- [IRC §4980H(a), (c)(2), (c)(4)](https://www.law.cornell.edu/uscode/text/26/4980H) — Shared responsibility for employers regarding health coverage (statute)
- [Rev. Proc. 2025-26, §2](https://www.irs.gov/pub/irs-drop/rp-25-26.pdf) (PDF) — The 2026 employer shared responsibility payment amounts (irs)
- [Rev. Proc. 2025-25, §3.02](https://www.irs.gov/pub/irs-drop/rp-25-25.pdf) (PDF) — The 2026 affordability percentage (irs)
- [IRS — Questions and answers on employer shared responsibility provisions, Q5, Q39, Q53–Q54](https://www.irs.gov/affordable-care-act/employers/questions-and-answers-on-employer-shared-responsibility-provisions-under-the-affordable-care-act) — How the §4980H(a) and (b) payments work, and the affordability safe harbors (irs)

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- **Terms taught:** [Employer shared responsibility payment](https://lopifi.com/md/glossary/employer-shared-responsibility-payment), [ACA affordability](https://lopifi.com/md/glossary/aca-affordability), [Minimum essential coverage](https://lopifi.com/md/glossary/minimum-essential-coverage)
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