What is the employer shared-responsibility payment?
The employer shared-responsibility payment is the penalty that's assessed on large employers if they don't offer adequate, affordable health coverage to their full-time employees and at least one of those employees gets subsidized coverage in the exchange/Marketplace.
Since 2015, employers with at least 50 full-time equivalent employees have been required to offer health coverage to at least 95% of their full-time employees (full-time means at least 30 hours per week). The coverage must provide minimum value and be considered affordable.
(Note that the affordability determination is based on the lowest-cost plan that the employer offers, as long as it provides minimum value. This may not be the plan that the employee prefers or is enrolled in, but it's what's used to determine whether the employer is compliant with the employer mandate.)
If the employer doesn't offer coverage or doesn't offer at least one plan that is affordable and provides minimum value, and if at least one full-time employee obtains a premium tax credit (subsidy) in the health insurance exchange/Marketplace, the employer is subject to a penalty, known as the employer shared-responsibility payment.1
How much is the employer shared-responsibility payment?
The penalty depends on whether the employer doesn't offer coverage at all, or offers coverage that is either not affordable and/or doesn't provide minimum value. The dollar amount that's used to calculate each penalty is inflation-adjusted each year (see question 55 in this IRS guidance). Here's how it works for 2026:2
- If the employer doesn't offer coverage at all and at least one full-time employee obtains a subsidy in the exchange, the penalty is calculated by taking the total number of full-time employees the business has, subtracting 30, and multiplying the result by $3,340 (an increase of $440 over the 2025 amount).
- If the employer offers coverage but it isn't affordable and/or doesn't provide minimum value, the penalty is calculated by determining how many employees received subsidized coverage in the Marketplace, and multiplying that number by $5,010 (an increase of $660 over the 2025 amount). But the amount of this penalty will never be higher than the penalty that would apply if the employer didn't offer coverage at all, so the first calculation is used instead if it would be a smaller penalty.
Footnotes
- "Employer shared responsibility provisions" Internal Revenue Service. Accessed Dec. 5, 2025 ⤶
- "Revenue Procedure 2025-26" Internal Revenue Service. Accessed Dec. 5, 2025 ⤶
