• Scott Clendaniel

ACA Pay or Play Penalties Increase in 2021

The Adjusted Penalty Amounts for 2021 are $2,700 and $4,060

Under the Affordable Care Act’s employer shared responsibility (pay or play) rules, applicable large employers—generally those who have 50 or more full-time employees (including full-time equivalent employees)—may be subject to a penalty if they do not offer affordable coverage that provides minimum value to their full-time employees and their dependent children.

Two separate penalties can apply under the employer shared responsibility rules—the Section 4980H(a) penalty and the Section 4980H(b) penalty.


  • The Section 4980H(a) penalty can apply when an ALE does not offer coverage to “substantially all” full-time employees (and dependents). The annual Section 4980H(a) penalty is calculated as the ALE’s number of full-time employees (minus 30) x $2,000 (as adjusted).

  • The Section 4980H(b) penalty can apply when an ALE does not offer coverage to all full-time employees, or the ALE’s coverage is unaffordable or does not provide minimum value. The annual Section 4980H(b) penalty is calculated as $3,000 (as adjusted) x the number of the ALE’s full-time employees who receive an Exchange subsidy.


After 2014, the applicable per-employee dollar amounts of $2,000 and $3,000 are increased based on the premium adjustment percentage for the year. The IRS announced that, for the 2021 calendar year, the adjusted $2,000 amount is $2,700 and the adjusted $3,000 amount is $4,060.

United Benefits Partners, Inc.

United Benefits Partners is an innovative employee benefits marketing firm that combines senior level carrier knowledge with modern technology and service platforms to create a complete benefits experience.

  • Facebook
  • Twitter
  • LinkedIn
Contact us

Address: 3000 Atrium Way, Suite 200
Mount Laurel, NJ 08054

Email: info@ubpbenefits.com

Phone: 856-345-0355

Fax: 856-200-8635

Sign up

Sign up to get the latest news.

© 2020 United Benefits Partners, Inc. | Designed By Donchid