If you’re an employer dealing with ACA compliance, brace yourself: the IRS just announced that employer penalties are going up by 15.2% in 2026. That’s the biggest jump we’ve seen in almost a decade, and it’s going to hit Applicable Large Employers (ALEs) where it hurts.
The Numbers Don't Lie
Starting in 2026, here’s what you’re looking at:
The “No-Offer” Penalty jumps from $2,900 to $3,340 per full-time employee. This kicks in when you don’t offer health coverage to at least 95% of your full-time workers and someone ends up getting subsidized coverage through the marketplace.
The “Affordability” Penalty shoots up from $4,350 to $5,010 per affected employee. You’ll face this one when your coverage doesn’t meet minimum value standards or costs more than 9.96% of an employee’s household income (up from 9.02% in 2025).
Why the Big Jump?
Healthcare costs keep climbing, and the government’s math reflects that reality. The IRS estimates employers now spend an average of $7,885 per employee on health premiums in 2025. That’s nearly 11% more than last year. When they recalibrated their baseline assumptions from 2013, the result was this steep penalty increase.
Think of it this way: when employees can’t get affordable coverage from you and turn to marketplace subsidies instead, these penalties help the government recoup those costs. The bigger the gap between what employers should be providing and what they actually offer, the steeper the penalty.
What This Means for Your Organization
These aren’t just numbers on a spreadsheet. They represent real money that could come out of your budget if you’re not careful. A small mistake, like missing coverage for one employee group or setting contributions just above the affordability threshold, can cost you big time.
For a company with 200 full-time employees, failing to offer coverage could mean penalties of over $560,000 annually. Even if you do offer coverage but it’s deemed unaffordable for just 20 employees, you’re looking at over $100,000 in penalties.
Getting Ahead of the Problem
The good news? You have time to prepare. Here’s what smart employers are doing now:
Audit your current setup. Make sure your health plan covers at least 95% of full-time employees and that employee contributions stay within affordability limits.
Use the safe harbors. The IRS provides several affordability safe harbors that can protect you from penalties even if an employee’s actual household income would make your coverage unaffordable.
Get your reporting right. Forms 1094-C and 1095-C need to be accurate and filed on time. Sloppy reporting can trigger audits and expose problems you didn’t even know you had.
Plan for growth. If your company is expanding and might hit the 50+ full-time employee threshold that makes you an ALE, start preparing your compliance strategy now.
Don't Wait Until 2026
The worst thing you can do is put this off until next year. Review your contribution strategies now, model out potential penalty scenarios, and make sure your payroll and HR systems can track everything accurately. If you’ve had significant turnover or organizational changes, double-check that you’re still meeting all the requirements.
With penalties this high, the cost of getting it wrong far outweighs the investment in getting it right. Whether you handle compliance in-house or work with a specialist, make sure you have a solid plan before these new penalty amounts take effect.
How Ameriflex Can Help
This is exactly why we built our ACA compliance services. Our team handles the heavy lifting on Forms 1094-C and 1095-C, making sure everything gets filed accurately and on time. But more importantly, we help you spot potential problems before they turn into expensive penalties.
With these 2026 increases, there’s no room for error. We work with you to track offers, monitor full-time status, and ensure your contribution levels stay within safe harbor limits. Our proactive approach means you can focus on running your business while we make sure you stay compliant.
Don’t let a preventable mistake cost you thousands in penalties. Let Ameriflex give you the peace of mind that comes with knowing your ACA compliance is handled by experts who understand exactly what’s at stake.