ACA Employer Shared Responsibility Payments Increasing for 2024

March 23, 2023

The IRS has issued Revenue Procedure 2023-17 announcing the 2024 indexed adjustments to the amounts used to calculate employer shared responsibility payments under Internal Revenue Code Sections 4980H(a) and 4980H(b)(1).  

Under the Affordable Care Act’s employer shared responsibility provisions, an applicable large employer is liable for a shared responsibility payment if:

• the employer fails to offer minimum essential coverage to 95 percent of full-time employees (and dependents) and at least one full-time employee receives a
  premium tax credit for purchasing coverage through the Marketplace (IRC section 4980H(a)), or
   
• the coverage they offer is not affordable or does not provide minimum value and at least one full-time employee receives a premium tax credit for purchasing coverage through the Marketplace. (IRC section 4980H(b)(1))   

ACA penalty amounts for 2024 are as follows:

• the penalty under 4980H(a) is increased to $2,970 per full-time employee, and
   
• the penalty under IRC 4980H(b)(1) is increased to $4,460 per full-time employee who receives the premium tax credit through the Marketplace.

The increase in ACA penalties for 2024 should prompt employers to review their health coverage offerings, confirm compliance with ACA regulations, and watch for future changes. Employers might also consider outsourcing ACA administration to a trusted partner to minimize financial risk.