- On February 20, 2024
The Internal Revenue Service (IRS) recently released guidance specifying the penalties that applicable large employers (ALEs) may face if they do not comply with the Affordable Care Act’s (ACA) Employer Shared Responsibility provisions (i.e., “the employer mandate”) during 2025. For the first time since 2015, when the ACA requirement that ALEs offer “affordable” and “minimum value” health insurance coverage to eligible employees and dependents or face penalty liability went into effect, the penalty amounts are decreasing.
Suppose an ALE is determined to have failed to offer at least minimum essential health insurance to 95% of full-time employees and their dependents, excluding spouses, in 2025. In that case, their penalty will be $2,900 per full-time employee minus the first 30. This is a $70 per employee reduction from the 2024 penalty rate. For every full-time employee who receives subsidized coverage through an exchange because they were not offered “affordable” and/or “minimum value” coverage in 2025, the penalty will be $4,350, a $110 decrease from 2024.