Estimate your potential ACA employer-mandate (“pay or play”) penalty exposure for 2026, and check whether a plan clears the 2026 affordability line. Built on the IRS 2026 figures: $3,340 and $5,010 penalties and a 9.96% affordability threshold.
Under the Affordable Care Act, Applicable Large Employers (ALEs) — generally those with 50 or more full-time and full-time-equivalent employees — must offer affordable, minimum-value coverage to full-time employees and their dependents, or risk a penalty under Internal Revenue Code section 4980H. A penalty is only triggered when at least one full-time employee receives a premium tax credit (subsidy) through the Marketplace.
| 4980H(a) — “no offer” | 4980H(b) — “unaffordable / not MV” | |
|---|---|---|
| When it applies | You fail to offer coverage to 95%+ of full-time employees | You offer coverage, but it’s unaffordable or not minimum value |
| 2026 amount | $3,340/yr ($278.33/mo) | $5,010/yr ($417.50/mo) |
| Multiplied by | All full-time employees minus 30 | Only each full-time employee who gets a subsidy |
You pay one or the other, never both. The 4980H(b) penalty is also capped so it can never exceed what the 4980H(a) penalty would have been.
Coverage is “affordable” in 2026 if the employee’s share of the lowest-cost self-only premium is no more than 9.96% of household income. Because employers don’t know household income, the IRS allows three safe harbors:
Federal Poverty Line: for calendar-year 2026 plans, the monthly premium can’t exceed $129.89 (9.96% of the $15,650 2025 FPL, divided by 12). W-2: 9.96% of the employee’s W-2 Box 1 wages. Rate of pay: 9.96% of (hourly rate × 130 hours) per month.