ACA Employer Penalties Rise Over 15% In 2026

Are your clients prepared for the increase?

What’s Changing?

Under the Affordable Care Act (ACA), Applicable Large Employers (ALEs) face penalties if they fail to offer affordable

Minimum Essential Coverage (MEC) to full-time employees.

2026 ACA Penalty Updates:

  • $3,340 per employee (Up from $2,900 in 2025) – Penalty if coverage isn’t offered to at least 95% of full-time staff and a subsidy is triggered.

  • $5,010 per employee (Up from $4,350 in 2025) – Penalty if the offered plan is not affordable or lacks minimum value, and an employee receives a subsidy on the exchange.

Why It Matters

These penalties can result in six-figure annual fines for employers who aren't compliant — especially those in retail, staffing, home health, hospitality, and other high-turnover industries.

Example:

An employer with 100 full-time employees could face over $330,000 annually in penalties under the new guidelines if no MEC coverage is offered.

How EBA Helps

At Essential Benefit Administrators, we specialize in:

  • Low-to-no cost ACA-compliant MEC plans

  • Effortless onboarding & administration

  • Protection against rising IRS penalties

  • Tailored solutions for part-time, variable-hour, and remote workforces

Stay Protected in 2026

As the cost of non-compliance grows, now is the time to review your benefits strategy. EBA can help your clients stay compliant while reducing benefit costs.

Contact Devin Morgan at 732-580-1955 or visit www.essentialbenefitplans.com to learn more.

Source & Acknowledgment

This newsletter summarizes key points from an article by Allison Bell, originally published on BenefitsPRO:

“IRS employer health insurance ‘pay-or-play’ penalties to rise 15.2% in 2026.”

Read the full article here: https://www.benefitspro.com/2025/07/23/irs-employer-health-insurance-pay-or-play-penalties-to-rise-152-in-2026/

Ryan Brown