ACA Reporting & Compliance continues to evolve. New reporting requirements, changing penalty rates, and updated affordability thresholds are among the changes for TY 2026 [filing in 2027].
A number of government marketplace subsidies on healthcare are also set to expire, meaning more employees are likely to be considering employer plans.
In short, now is the time to get ahead of these changes.
Below is a quick guide to help employers frame what’s needed to keep ahead of the TY26 changes and avoid unnecessary costs, resource log jams, and increased risk.
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PENALTIES GOING UP
Each year the IRS adjusts penalties or Employer Shared Responsibility Payments [ESRP] for ACA non-compliance. The projected penalties for TY26 are as follows:
4980H(a) penalties [or Penalty A fines — for failing to offer coverage to 95% of full-time employees] are projected to exceed an annualized total of $3,340 per employee — multiplied by full FTE count [minus 30 employees].
4980H(b) penalties [or Penalty B fines — for offering unaffordable or non-compliant coverage] are projected to exceed $5,010 per employee — paid on a per case basis.
Wherever these final dollar amounts net out, small errors can quickly add up to sizeable total penalties. BENEFITSCAPE remediated over $50 million in penalties for new clients in 2025. Now is the time to ensure your eligibility tracking is in place and affordability properly calculated for TY26 — to avoid unnecessary risk and costly workloads at the end of the tax year.
NEW AFFORDABILITY THRESHOLDS
Each year, the IRS sets a threshold for the “affordability” of cover offered employees under the ACA Employer Mandate. This threshold can be calculated in various ways but is essentially set as a percentage of household income. For TY26 this percentage will be set at 9.96% of household income — for self-only coverage in the employer’s lowest cost plan. Significantly up from the 9.02% set for TY25.
Once again, now is the time for employers to revisit their contribution strategy to ensure they have not fallen behind the new threshold.
THE IRS HAS SMART TOOLS TOO!
Back in 2024, the ACATOZ blog sounded an early warning about a RegTech Revolution taking place inside the IRS. See RegTech Revolution Transforming IRS Powers.
The IRS continues to deploy increasingly powerful and intelligent Regtech to identify even small errors, anomalies, or suspect patterns in employers’ ACA submissions.
Industries making high use of Part-Time or Variable-Hour Employees should be particularly aware of increased IRS scrutiny. Legacy data systems and processes simply can’t be expected to keep up with modern IRS analytics. So now is the time to audit your ACA systems, diagnostics, and vendors.
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CONTACT BENEFITSCAPE
BENEFITSCAPE is the market leader in ACA Reporting & Compliance. Whatever your ACA needs, from prior penalty remediation to your final e-filing, or any step in between, we are happy to help. Our deep knowledge of employee benefits, equally deep expertise in data technology, and our own intelligent and system-agnostic ACA_RegTech all combine to cut time, resource burdens, and risk for employers.
Don’t wait. Contact us today by emailing info@benefitscape.com, call +1 508-655-3307, or use the contact form on benefitscape.com.
