ACA Penalties Still Apply — And They’re Increasing for 2026

As your business grows, Affordable Care Act (ACA) rules can apply sooner than expected. While the individual mandate penalty was eliminated, employer requirements are still in effect and ACA penalties are increasing in 2026.

When do the Rules Apply?

Businesses become subject to ACA “play-or-pay” rules once they reach 50 full-time employees, including full-time equivalents (FTEs).

Keep in mind:

• Full-time = 30+ hours per week, not 40

• Part-time hours count toward FTEs, which can push you over the threshold faster than expected

Potential ACA Penalties

If you’re classified as an Applicable Large Employer (ALE), penalties may apply if:

• You don’t offer coverage to at least 95% of full-time employees, or

• Your coverage is unaffordable or doesn’t meet minimum value

Higher Penalties in 2026

• $3,340 per employee for not offering coverage

• $5,010 per affected employee for inadequate coverage

What to Watch

As your workforce expands, make sure you:

• Track your employee count and FTEs closely

• Properly classify full-time employees

• Prepare for ACA reporting (Forms 1094-C and 1095-C)

Bottom Line

ACA compliance remains an important responsibility for growing businesses. Understanding the rules now can help you better manage health care costs, reporting requirements and potential penalties in the future.