IRS Announces 2025 Decreases for Employer Shared Responsibility Payments

On February 12, 2024, the IRS released Rev. Proc. 2024-14 to provide the adjusted excise tax amounts under the Affordable Care Act’s Employer Shared Responsibility provisions (also known as the ACA Pay or Play Penalty) for 2025.

For background, employers with more than 50 full-time employees (including full-time equivalent employees) are subject to the ACA Pay or Play Penalty under Section 4980H of the Internal Revenue Code (the “Code”). Employers subject to ACA Pay or Play may be liable for a penalty if they do not offer minimum essential coverage to a sufficient number of full-time employees, or if minimum essential coverage is offered to the required number of full-time employees, but that coverage is not affordable.

2025 Adjusted Penalty Amounts

• The adjusted amount penalty for purposes of Section 4980H(a) of the Code is $2,900 (a $70 decrease from 2024)
• The adjusted amount penalty for purposes of Section 4980H(b) of the Code is $4,350 (a $110 decrease from 2024)