IRS Announces ACA Pay or Play Penalties for 2024

The IRS released 2024 penalty amounts on March 9, 2023. This notice is related to the ACA Employer Mandate Penalties. The IRS notice can be reviewed by clicking here.

Under the Pay or Play rules, an ALE (applicable large employer) could be liable for a penalty if at least one full-time employee receives a subsidy for Exchange coverage.

If the ALE is offering affordable and minimum value coverage to full-time employees, the employees are not eligible for Exchange coverage or subsidies.

New Penalty Rates

Penalty	2023	2024	Increase
Penalty A	$2,880	$2,970	↑ $90 per employee
Penalty B	$4,320	$4,460	↑ $140 per employee

Penalty

2023

2024

Increase

Penalty A

$2,880

$2,970

↑ $90 per employee

Penalty B

$4,320

$4,460

↑ $140 per employee

Refresher of the 2 penalty types

The penalties will be based on the 2024 calendar year and the information reported during the ACA reporting period in early 2025.

Penalty A (under Section 4980H(a))

The ALE would be subject to this penalty if they do not offer minimum essential coverage to 95% of all full-time employees (penalty calculation would deduct the first 30 employees) and their dependents. The penalty would come about if any full-time employee purchases subsidized coverage through the Exchange.

Penalty B (under Section 4980H(b))

The ALE would be subject to this penalty if they do not offer coverage that is affordable and provides minimum value. The penalty would come about if a full-time employee receives subsidized coverage through the Exchange. The penalty would apply to the employee receiving a subsidy through the Exchange if triggered.

More information can be found by clicking on the IRS website links below.