ACA Compliance in 2026: What’s Changing and How to Stay Ahead

If you’re an employer with 50 or more full-time employees, ACA compliance isn’t optional—it’s part of doing business. But the truth is, it’s also getting trickier. Between new reporting updates, shifting penalties, and the growing importance of affordable coverage, 2026 will bring some important changes that employers can’t afford to ignore.

The good news? Staying compliant doesn’t have to mean losing sleep—or blowing your budget. Let’s unpack what’s new, what’s next, and how you can stay ahead of the Affordable Care Act (ACA) requirements without the headaches.

What’s the ACA, Again? A Quick Refresher

The Affordable Care Act (ACA) requires Applicable Large Employers (ALEs)—those with 50 or more full-time employees or full-time equivalents—to offer Minimum Essential Coverage (MEC) that’s both affordable and meets minimum value standards.

In plain English:
You need to offer health coverage that covers the basics (preventive services, doctor visits, hospital care) and doesn’t cost employees more than a certain percentage of their income.

Failing to do so can lead to significant IRS penalties—and those penalties increase every year.

That’s where Minimum Essential Coverage (MEC) plans come in. They’re a cost-effective way for employers to meet ACA requirements and provide meaningful health coverage without overextending their budget.

What’s Changing in 2026

The ACA continues to evolve each year. Here are the key updates employers need to keep an eye on for 2026:

1. Higher Employer Penalties

Let’s start with the not-so-fun part. The IRS adjusts Employer Shared Responsibility Payment (ESRP) penalties every year for inflation. In 2026, expect another bump.

  • 4980H(a) penalty (for failing to offer coverage to 95% of full-time employees): projected to exceed $2,950 per employee.

  • 4980H(b) penalty (for offering unaffordable or non-compliant coverage): likely to climb past $4,400 per affected employee.

That means even a small slip-up can become a costly mistake.
If your reporting or eligibility tracking isn’t airtight, you could be hit with fines that add up quickly.

2. Tighter Affordability Thresholds

Each year, the IRS updates what’s considered “affordable” under the ACA. For 2026, experts anticipate the affordability percentage will dip again—continuing the downward trend we’ve seen since 2020.

That means the employee’s share of the lowest-cost self-only plan can’t exceed roughly 8% of their household income (give or take).

The takeaway: Employers who haven’t revisited their contribution strategy in a while might find that what was “affordable” last year no longer qualifies in 2026.

3. More Scrutiny Around Data and Reporting

The IRS continues to ramp up its use of technology and data-matching to flag potential ACA noncompliance. That means errors on your 1094-C or 1095-C forms—like missing or incorrect employee information—can lead to letters, fines, or even audits.

Employers who rely on manual tracking or outdated HR systems will find it harder to keep up with new reporting standards. It’s not just about checking the box—it’s about accuracy, consistency, and documentation.

4. Renewed Focus on Part-Time and Variable-Hour Workers

Industries like hospitality, staffing, and home healthcare—where schedules fluctuate—should expect more enforcement around variable-hour employees.

The IRS will likely continue focusing on employers who misclassify workers or fail to offer coverage to eligible part-timers who cross the full-time threshold over a measurement period.

Translation: if you’re not carefully tracking hours and eligibility, you’re at risk.

What Employers Can Do Now to Stay Ahead

You don’t need to wait for 2026 to make changes. The most successful employers are already taking proactive steps to stay compliant while controlling costs.

Here’s how.

1. Reevaluate Your Coverage Strategy

Offering coverage doesn’t have to mean offering a gold-plated health plan.
Minimum Essential Coverage (MEC) plans are a smart way to check the compliance box while keeping costs predictable.

MEC plans cover all ACA-required preventive services and meet the federal definition of “minimum essential coverage.” They’re ideal for large employers in industries with high turnover or tight margins—like food service, retail, hospitality, and home healthcare.

MEC plans help you:

  • Meet ACA requirements

  • Avoid hefty IRS penalties

  • Offer real, usable coverage to employees

  • Control your benefits spend

At Essential Benefit Administrators (EBA), we’ve designed MEC plans that make compliance simple, affordable, and fast to implement—so you can focus on running your business, not decoding ACA jargon.

2. Audit Your Data and Reporting Systems

Before the IRS does it for you, check your own data.
Make sure your HR and payroll systems can accurately track:

  • Employee hours (especially variable-hour and seasonal workers)

  • Coverage offers and acceptance dates

  • Affordability calculations

  • Correct employee identifiers for 1094-C/1095-C forms

If your data isn’t organized, you’re vulnerable to reporting errors.
Many employers find that partnering with a benefits administrator—like EBA—helps simplify compliance tracking and documentation.

3. Double-Check Your Affordability

Even small adjustments in employee contributions can affect compliance.
If you haven’t reviewed your plan’s affordability threshold since last year, now’s the time.

Use the IRS “safe harbor” methods (W-2, rate of pay, or federal poverty line) to calculate affordability and confirm that your lowest-cost MEC plan fits within the updated limits.

Our team can help employers run these calculations and ensure their plans stay compliant without overpaying.

4. Communicate Clearly with Employees

Compliance isn’t just about offering coverage—it’s about making sure employees understand it.

If workers don’t know they have access to affordable coverage and skip enrollment, your compliance record could still be at risk.

Be proactive about communication:

  • Use plain language (skip the jargon)

  • Send reminders about enrollment deadlines

  • Explain what the plan includes and how it helps

  • Keep records of communication efforts

Why MEC Plans Are the Easiest Way to Stay Compliant

For many employers, offering full-blown major medical coverage to all full-time employees just isn’t financially feasible. MEC plans bridge that gap.

They’re ACA-compliant, budget-friendly, and quick to implement—often within days, not months. And because they’re designed for affordability, they help you stay compliant even as IRS thresholds shift year to year.

At EBA, our MEC plans are built with employers in mind:

  • Fast setup – Get compliant coverage in place quickly.

  • Flexible options – Choose from multiple plan designs.

  • Bilingual support – Ensure all employees understand their benefits.

  • ACA expertise – Rely on our team to stay ahead of regulatory changes.

Looking Ahead: ACA Compliance Beyond 2026

The ACA isn’t going anywhere. If anything, the trend is toward more oversight and more emphasis on affordability.

Employers who take a proactive approach—by implementing the right coverage strategy and staying up to date on regulation changes—will find that ACA compliance doesn’t have to be stressful or expensive.

It just takes planning, partnership, and the right tools.

The Bottom Line

2026 will bring tighter ACA rules, higher penalties, and more enforcement—but also opportunities for smart employers to stay ahead of the curve.

By choosing the right Minimum Essential Coverage (MEC) partner, auditing your data, and communicating clearly with your workforce, you can meet your compliance goals and take care of your employees.

At EBA, we help employers like you simplify compliance, save money, and focus on what matters most—running your business with confidence. Ready to get your benefits in line for next year? Book some time to talk with our team today.

Jennifer Lagemann