On May 4, 2026, the IRS issued Revenue Procedure 2026-22, which provides the 2027 ACA employer mandate penalty amounts. The penalty amounts increased compared to 2026.
The ACA employer mandate requires applicable large employers (ALEs), those with 50 or more full-time employees and full-time equivalent employees, to offer affordable minimum value (MV) coverage to all full-time employees and their dependents or risk a penalty. As outlined below, an employer can be assessed one of two potential penalties. The amounts of these penalties are adjusted each year based on national health expenditure projections.
For calendar year 2027, the annual penalties are calculated as follows:
- Penalty A (failure to offer minimum essential coverage to 95% of all full-time employees and their dependents and at least one full-time employee purchases exchange coverage and receives a premium tax credit):
- (Total number of full-time employees – 30 full-time employees) x $3,780 (an increase from $3,340 in 2026).
- Penalty B (failure to offer affordable coverage that meets MV standards):
- (Number of full-time employees who receive a premium tax credit) x $5,670 (an increase from $5,010 in 2026).
Both penalties, although commonly expressed as annual amounts, are assessed monthly.
Employer Takeaway
The 2027 penalty increases are considerable; ALEs may want to review their ACA compliance practices to reduce any potential ACA penalty exposure. Specifically, ALEs should verify that employees who work at least 30 hours per week (as determined under the monthly or lookback measurement method) are offered affordable MV coverage.
Additionally, ALEs should ensure they accurately and timely report all required information on IRS Forms 1094-C and 1095-C. The IRS uses Letter 226-J to inform employers of their potential liability for employer mandate penalties. Employers should promptly review and respond to any IRS Letter 226-J they receive and consult with counsel as necessary.
For further information regarding the ACA employer mandate and penalties, please ask your broker or consultant for a copy of the NFP publication ACA: Employer Mandate Penalties and Affordability.