---
title: Pay or Play Penalties Increase for 2023
description: The IRS revised its frequently asked questions, updating the pay or play penalty amounts for 2023.
---

[Employee Benefit News for School, City and County Employers ](https://blog.nisbenefits.com)

# [Pay or Play Penalties Increase for 2023](https://blog.nisbenefits.com/pay-or-play-penalties-increase-2023)

 Written by [Rick Labian](https://blog.nisbenefits.com/author/rick-labian) | Aug 31, 2022 7:15:00 PM

*2 minute read*

The IRS revised its [frequently asked questions](https://www.irs.gov/affordable-care-act/employers/questions-and-answers-on-employer-shared-responsibility-provisions-under-the-affordable-care-act), updating the pay or play penalty amounts for 2023. The [pay or play rules](https://blog.nisbenefits.com/pay-or-play-affordability-percentage-decreased), also referred to as employer shared responsibility is part of the Affordable Care Act and requires applicable large employers (ALE) 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.

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 full-time employees and dependents and any one of its full-time employees receives a subsidy toward his or her 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.

- The adjusted $2,000 amount is $2,880
- The adjusted $3,000 amount is $4,320

[Download the bulletin](https://blog.nisbenefits.com/hubfs/Blog%20-%20supporting%20documents/bulletin-pay-play-penalties-2023.pdf) for more details.

[View full post](https://blog.nisbenefits.com/pay-or-play-penalties-increase-2023)

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