IRS Announces Increases to ACA Employer Mandate Penalty for 2024

For 2023, the ACA affordability threshold was decreased by 0.49% to 9.12%–meaning that many employers will be required to pay more for employee coverage in 2023 because employer-sponsored coverage will only be deemed affordable if the employee’s required contribution for self-only coverage does not exceed 9.12% of the employee’s household income. Now, the IRS has announced an increase in the penalties that can be assessed in 2024 if the employer fails to offer affordable coverage to at least 95% of its full-time employees (and dependents) and at least one employee receives a premium tax credit. The penalties under IRC Section 4980H(a) were increased to $2,970 in 2024 (a $90 increase from 2023). The penalties under IRC Section 4980H(b) were increased to $4,460 (a $140 increase from 2023). That means the monthly penalties for 2024 will be equal to $247.50 and $371.67. For more information on the employer mandate penalties, visit Tax Facts Online. : Q 469.