The Affordable Care Act (ACA) affordability percentage has been increased to 9.02% in 2025, up from 8.39% in 2024. This is an increase after last year’s significant decrease and has implications for Applicable Large Employers (ALEs) and their healthcare options. Remember that an ALE is an employer with at least 50 full-time equivalent employees in the previous calendar year.
What is ACA Affordability Percentage? The ACA affordability percentage is intended to ensure that employees have access to affordable healthcare coverage, and represents the threshold where coverage is considered to be affordable. That means that in 2025, healthcare coverage is considered to be affordable if it does not exceed 9.02% of an employee’s household income. Covered employers must now assess their healthcare options so that they comply with the employer mandate to avoid fines and legal trouble.
According to SHRM, the employer share responsibility penalties apply if “employer-sponsored coverage is determined to be unaffordable or does not provide minimum value, and if one or more full-time employees receive subsidized coverage through an exchange.” Penalties are significant and employers should do everything they can to maintain compliance.
The Employer Shared Responsibility requirements two penalties are below, each with their own amounts. For 2025, the penalties are as follows:
4980H(a)
This penalty, part of the Employer Shared Responsibility Payment, is for ALEs who don’t offer minimum essential healthcare coverage (MEC) to their full-time employees (FTE). The penalty amount is $2,900 annually for each FTE, minus the first 30 FTEs. This is actually a decrease from the 2024 penalty amount of $2,970.
4980H(b)
Another penalty included in the Employer Share Responsibility Payment, is for ALEs who offer healthcare coverage to their FTEs but the coverage doesn’t meet the affordability or minimum value thresholds. The penalty amount is $4,350 annually for each FTE who receives healthcare coverage subsidy through an exchange. This is also a decrease from the 2024 penalty amount of $4,460.
Compliance is essential to avoid large penalties, and there are even more penalties that deal with failure to file, furnish forms, and more. ALEs subject to the ACA requirements can ensure compliance by working with a trusted partner like TASC. It’s what we do! Let TASC ensure ACA compliance, staying on top of regulatory changes and changes that could impact your organization!
