--- title: 2025 Pay-or-Play Penalties Decrease description: The IRS released updated penalty amounts for 2025 related to the employer shared responsibility (pay-or-play) rules under the Affordable Care Act. image: https://blog.nisbenefits.com/hubfs/blog-headers/pay-or-play-25-b.jpg --- ![2025 Pay-or-Play Penalties Decrease](https://blog.nisbenefits.com/hubfs/blog-headers/pay-or-play-25-b.jpg) # 2025 Pay-or-Play Penalties Decrease - Home - [Employee Benefit News for School, City and County Employers](https://blog.nisbenefits.com) - 2025 Pay-or-Play Penalties Decrease [ Erin Woulfe ](https://blog.nisbenefits.com/author/erin-woulfe) 02/20/2024 [ Health Insurance Solutions](https://blog.nisbenefits.com/topic/health-insurance-solutions), [ Legislative News](https://blog.nisbenefits.com/topic/aca-other-legislative-news) [0 Comments ](https://blog.nisbenefits.com/2025-pay-or-play-penalties-decrease#postComment) 1 Minutes *1.5 minute read* The IRS released updated employer responsibility (pay-or-play) penalty amounts under the Affordable Care Act (ACA). The rules require applicable large employers (ALEs) to offer affordable, minimum value health coverage to their full-time employees or pay a penalty.ALEs may be liable for a penalty if at least one full-time employee receives a subsidy for Exchange coverage. Employees who are offered affordable, minimum value coverage are generally not eligible for these Exchange subsidies.   ## **The Penalties** Two separate penalties can apply under these rules: Section 4980H(a) penalty and Section 4980H(b) penalty. **Section 4980H(a) Penalty:** Applies when an ALE does not offer coverage to “substantially all” (generally at least 95%) full-time employees and dependents and any one of its full-time employees receives a subsidy towards their Exchange plan. The monthly penalty is calculated as the ALE’s number of full-time employees (minus 30) multiplied by 1/12 of $2,000 (as adjusted) for any applicable month. **Section 4980H(b) Penalty:** Applies when the ALE does not offer coverage to substantially all full-time employees and dependents and at least one full-time employee obtains a subsidy through an Exchange or the ALE’s coverage is unaffordable or does not provide minimum value. The monthly penalty is calculated as 1/12 of $3,000 (as adjusted) for any applicable month. However, the total penalty for an ALE is limited to the **4980H(a) penalty amount.** The applicable per employee dollar amounts of $2,000 and $3,000 are increased based on the premium adjustment percentage for the year. For calendar year 2025: - The adjusted $2,000 amount is $2,900 - The adjusted $3,000 amount is $4,350  Download the [bulletin](https://blog.nisbenefits.com/hubfs/blog-supporting-docs/bulletin-pay-or-play-penalties-2025.pdf) for more details.   ### **Additional Resources** [Employer Shared Responsibility Provisions](https://www.irs.gov/affordable-care-act/employers/employer-shared-responsibility-provisions) [Types of Employer Payments and How They Are Calculated](https://www.irs.gov/affordable-care-act/employers/types-of-employer-payments-and-how-they-are-calculated) [![Integrated Services of Kalamazoo Case Study](https://no-cache.hubspot.com/cta/default/3325505/db6870fb-9076-43ca-8d86-f3751428b769.png)](https://cta-redirect.hubspot.com/cta/redirect/3325505/db6870fb-9076-43ca-8d86-f3751428b769) --- #### Tag: [ Health Insurance Solutions](https://blog.nisbenefits.com/topic/health-insurance-solutions) [ Legislative News](https://blog.nisbenefits.com/topic/aca-other-legislative-news) #### Share: - 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