ACA penalty updates for 2025

Navigating the U.S. healthcare system can be confusing, especially for small to mid-sized businesses needing to provide compliant healthcare plans for their employees. Since passing in 2010, the Affordable Care Act (ACA), commonly known as “Obamacare,” has aimed to make health insurance more accessible for Americans.

However, the ACA brought health insurance reforms and tax provisions that impacted businesses, mandating companies with 50 or more full-time employees to offer health insurance or face significant ACA fines. Many small businesses have struggled to afford comprehensive health insurance for their employees. This results in minimal coverage that fails to support employees or leaves the organization non-compliant and facing penalties.

Before heading into 2025, it is important to be informed of ACA regulations to avoid fines and meet compliance deadlines. With a few new updates for 2025 and speculation about potential policy shifts under the incoming presidential administration, now is the time to act.

This article will provide an overview of the key ACA updates for 2025 requirements for businesses, important dates and deadlines, and strategies to help your organization ensure compliance without breaking the bank.

Key ACA Updates

Below, we break down changes for 2025  to help your company navigate the upcoming requirements and ensure you’re prepared.

Understanding ACA fines for 2025

Any company with 50 or more full-time employees or full-time equivalents is considered an Applicable Large Employer (ALE) and must meet ACA requirements by offering minimum essential coverage (MEC). Failure to comply with ACA mandates can result in substantial penalties that can derail your business goals.

To figure out if you’re considered an ALE, add up the total hours worked by all part-time or hourly employees in a week. Next, divide that number by 30 (for 30 hours per week) to identify your full-time equivalents. Add that number to your actual full-time employee count and if that number is over 50, your business is considered an Applicable Large Employer.

So, let’s break down what the ACA fines are for 2025 and what they mean for your company:

4980H (Part A) Penalty

Part A penalties apply when your company fails to provide minimum essential coverage (MEC) to at least 95% of its full-time employees. For 2025, the Part A penalty is set at $2,900 per eligible employee annually, minus the first 30. So, if you have 60 FTEs, your fine for one year of non-compliance would be $87,000. 

It’s also worth noting that the IRS will look back at each year you were out of compliance, so if it’s been several years, expect that number to increase.

4980H (Part B) Penalty

The Part B penalty applies if your company’s offering fails to meet the ACA’s minimum value (covering at least 60% of healthcare costs), is deemed unaffordable for employees, or both.

For 2025, coverage is considered unaffordable if an employee’s contribution exceeds 9.02% of their household income. The Part B penalty for 2025 is $4,350 per employee.

Filing Penalties

Submitting incorrect or incomplete information can also result in ACA fines. The price of these penalties varies but can be substantial.

Here’s what to be aware of:

1. IRC Section 6721: A penalty for failing to file an information return or statement accurately and/or on time by the specified due date.
2. IRC Section 6722: A penalty for not furnishing a payee statement correctly and/or by the deadline.

Strategies to Mitigate ACA Penalties

The number one way to avoid ACA fines is to familiarize yourself with reporting requirements, including deadlines.

Strategies include:

1. Understand ACA compliance requirements thoroughly to avoid oversight.
2. Engage a professional to assist with filing and compliance.
3. Ensure your employee data is accurate and up to date.
4. Ensure you’re accurately calculating your Full-Time Equivalents (FTEs).
5. Start early to avoid the last-minute scramble and ensure thorough preparation.
6. Meet all ACA-related deadlines to avoid last-minute issues and fees.