Penalty Increases for 2025 Returns

2025 ACA Pay or Play Penalties Decreasing

The IRS released the 2025 penalty amounts regarding the employer shared responsibility (pay-or-play) rules under the Affordable Care Act (ACA). For the 2025 calendar year, Penalty A will be $2,900 (a decrease of $70 per employee from 2024). Penalty B will be $4,350 (a decrease of $110 per employee from 2024). These penalty amounts apply for failures to offer affordable, minimum-value coverage during the 2024 calendar year.

Due to the pay-or-play rules, an applicable large employer (ALE) is liable for a penalty only if a full-time employee receives a subsidy for Exchange coverage. However, employees who are offered affordable, minimum-value coverage are typically ineligible for Exchange subsidies. The two penalty options are as follows:

  • 4980(a) penalty (or Penalty A) – an ALE is subject to this penalty if the employer does not offer coverage to around 95% of the full-time employees and their dependents, and at least one employee receives a subsidy toward an Exchange plan.
  • 4980H(b) penalty (or Penalty B) – an ALE that offers coverage to “substantially all” full-time employees and their dependents could still face a penalty if at least one full-time employee obtains a subsidy through an Exchange because the available coverage was unaffordable and didn’t provide minimum value.

Additional resources are available through the IRS on Employer Shared Responsibility Provisions and Types of Employer Payments and How they are Calculated.

If you have questions, please contact your dedicated Creative Benefits, Inc. team member.