Sarah Borders, CEBS March 14, 2023 5 min read

ACA Penalties for 2024 Released

On March 9, 2023, the IRS issued Rev. Proc. 2023-17 reflecting the indexed changes to the 2024 calendar year ACA penalties that could apply to applicable large employers (ALEs).

Penalty A, which could apply when an applicable large employer fails to offer minimum essential coverage (MEC) to at least 95% of full-time employees, will increase to $2,970 for 2024. The monthly penalty assessed on ALEs who fail to offer coverage to at least 95% of full-time employees and their dependents is equal to the number of FT employees (less the first 30) times 1/12 of $2,970 for any month in which a penalty applies. In other words, $247.50 per month per full-time employee minus 30 could be applied for an ALE who fails to offer MEC to at least 95% of full-time employees.

Penalty B, which could apply when an ALE’s offered coverage either is unaffordable or does not meet minimum value, will increase to $4,460 per year for the calendar year 2024. The monthly penalty assessed for each full-time employee who receives a subsidy on the exchange is equal to 1/12 of $4,460 for any month in which a penalty applies, or $371.67 per month per full-time employee who receives a subsidy.

To avoid such penalties, employers should determine each calendar year if they are an applicable large employer, and then ensure minimum essential coverage is offered to at least 95% of all full-time employees and their dependents. In addition, the coverage should meet minimum value and be considered affordable under one of the three affordability safe harbors (federal poverty level, rate of pay, or W-2 safe harbors).

If you have questions, please reach out to a member of your Hausmann Group team.

Sarah Borders, CEBS

Principal, Benefits Compliance Solutions. Sarah has spent the last 15 years in the employee benefits industry, has numerous designations and serves on NAHU’s Employer Working Group Subcommittee and is an active board member of Austin AHU. She recently stepped down as Vice President of Benefits Compliance at one of the nation's largest brokerage firms to start her own compliance consulting practice. Her designations include an active license with the Texas Department of Insurance, CEBS (Certified Employee Benefits Specialist), Certified Health Care Reform Professional, HIPAA certification and Health Care Service Associate. She holds an MBA from Texas A&M Corpus Christi and a BA from University of Incarnate Word. Her consulting firm, Benefits Compliance Solutions, partners with employers to identify unknown risks and avoid hundreds of thousands of dollars in fines and lawsuits from failure to comply with their healthplan obligations.