The IRS has released the 2027 employer shared responsibility (pay-or-play) penalty amounts in Revenue Procedure 2026-22. Both penalties went up for 2027, so applicable large employers should factor the higher numbers into their coverage and affordability decisions.
What is changing for 2027
| Penalty | 2026 | 2027 |
|---|---|---|
| Section 4980H(a), per full-time employee (minus 30) | $3,340 | $3,780 |
| Section 4980H(b), per affected employee | $5,010 | $5,670 |
The 4980H(a) penalty applies when an applicable large employer does not offer coverage to at least 95% of its full-time employees and their dependents, and at least one full-time employee receives a Marketplace premium tax credit. It is calculated on your total full-time employees minus 30, and assessed monthly at one-twelfth of the annual amount. The 4980H(b) penalty applies for each full-time employee who receives a subsidy because the coverage you offered was not affordable or did not provide minimum value.
What employers should do
- Confirm your offer of coverage. Make sure you are offering coverage to at least 95% of full-time employees and their dependents to stay clear of the larger 4980H(a) exposure.
- Re-check affordability. The 4980H(b) penalty is driven by affordability and minimum value. The 2027 affordability percentage has not been released yet (watch for it later in 2026), so revisit your contribution strategy once it is published.
- Keep your documentation. The IRS proposes these assessments through Letter 226J. Retain your offer records, affordability worksheets, and full-time determinations so you can respond within the deadline if you receive one.
For how to determine who is full-time and how these penalties are assessed, see our Full-Time / Part-Time Determination page.
This is general educational information, not legal or tax advice. Confirm how these rules apply to your specific situation with your broker, carrier, or qualified advisor.