Compliance

Just a reminder, under the Employer Mandate, Applicable Large Employers with 50 or more full-time or full-time equivalent employees must provide affordavle Minimum Essential Coverage meeting Minimum Value to at least 95% of their full-time workers and their dependents.

2025 4980(a) Penalty

Starting in 2025, the penalty for 4980H(a) will be $241.67 per employee per month or $2,900 annually, a decrease from the 2024 amount of $2,970.

Employers failing to offer Minimum Essential Coverage to 95% of fill-time employees and dependents may face significant penalties. The 4980H(a) penalty, also known as the”hammer penalty,” is applied as a pass/fail measure. If coverage isn’t provided to 95% of full-time employees, the penalty applies to entire full-tie workforce, excluding the 30-employee exemption.

2025 4980H(b) Penalty

In 2025, the 4980H(b) penalty is $362.50 monthly or $4,350 annually per employee, down from the 2024 amount of $4,460.

Unlike the 4980H(a) penalty, 4980H(b) penalties are assessed per violation. An employee must first receive inadequate coverage and then qualify for a Premium Tax Credit from a state or federal marketplace, triggering a 4980H(b) violation and a possible Letter 226J penalty.

The IRS enforces a 4980H(b) penalty if an employer offers full-time employees coverage that is unaffordable, does not need Minimum Value, or both. A Premium Tax Credit abtained by at least one employee from a state or federal health exchange indicate non-compliance with the ACA’s Employer Mandate.

Smart Choices Health is a leader in affordable solutions for employers required to meet these mandates.

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