Title 26 — Internal Revenue CodeRelease 119-73
§4980H Shared responsibility for employers regarding health coverage
Title 26 › Subtitle Subtitle D— - Miscellaneous Excise Taxes › Chapter CHAPTER 43— - QUALIFIED PENSION, ETC., PLANS › § 4980H
Summary
Big employers must offer their full-time workers and their dependents a chance to enroll in minimum essential health coverage under an employer plan. If an employer does not offer that coverage for any month and at least one full-time worker gets a premium tax credit or cost-sharing reduction to buy a Marketplace plan for that month, the employer will owe a penalty for that month. If the employer does offer coverage but one or more full-time workers still get such credits, the total monthly penalty the employer can owe is capped. That cap is the number of full-time employees for the month multiplied by the applicable payment amount, which is 1/12 of $2,000. Key terms in one line each: applicable payment amount = 1/12 of $2,000; applicable large employer = an employer who averaged at least 50 full-time employees on business days in the prior year; full-time employee = someone who works on average at least 30 hours per week; applicable premium tax credit and cost-sharing reduction = premium tax credits, cost-sharing reductions, and advance payments of those. Employers are treated as one employer when required by tax rules. If an employer’s workforce went above 50 for 120 days or fewer and the extra workers were seasonal (as defined by the Secretary of Labor, including holiday retail workers), the employer is not treated as a large employer. For counting, employers can reduce the full-time count by 30 when calculating the penalty limit, and that single 30-person reduction is shared among related employers. Part-time hours can be added up and divided by 120 to count extra full-time equivalents. People with TRICARE or certain VA coverage are not counted as employees for this test. Dollar amounts are adjusted after 2014 by the ACA premium adjustment percentage and rounded down to the nearest $10. Penalties are assessed and collected like other tax penalties, may be billed monthly or otherwise, can be repaid if a credit is later disallowed, and the employer gets at least 90 days to respond to a proposed assessment.
Full Legal Text
Title 26, §4980H
Internal Revenue Code — Source: USLM XML via OLRC
(a)If—
(1)any applicable large employer fails to offer to its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan (as defined in section 5000A(f)(2)) for any month, and
(2)at least one full-time employee of the applicable large employer has been certified to the employer under section 1411 of the Patient Protection and Affordable Care Act as having enrolled for such month in a qualified health plan with respect to which an applicable premium tax credit or cost-sharing reduction is allowed or paid with respect to the employee,
(b)(1)If—
(A)an applicable large employer offers to its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan (as defined in section 5000A(f)(2)) for any month, and
(B)1 or more full-time employees of the applicable large employer has been certified to the employer under section 1411 of the Patient Protection and Affordable Care Act as having enrolled for such month in a qualified health plan with respect to which an applicable premium tax credit or cost-sharing reduction is allowed or paid with respect to the employee,
(2)The aggregate amount of tax determined under paragraph (1) with respect to all employees of an applicable large employer for any month shall not exceed the product of the applicable payment amount and the number of individuals employed by the employer as full-time employees during such month.
(c)For purposes of this section—
(1)The term “applicable payment amount” means, with respect to any month, 1⁄12 of $2,000.
(2)(A)The term “applicable large employer” means, with respect to a calendar year, an employer who employed an average of at least 50 full-time employees on business days during the preceding calendar year.
(B)(i)An employer shall not be considered to employ more than 50 full-time employees if—
(I)the employer’s workforce exceeds 50 full-time employees for 120 days or fewer during the calendar year, and
(II)the employees in excess of 50 employed during such 120-day period were seasonal workers.
(ii)The term “seasonal worker” means a worker who performs labor or services on a seasonal basis as defined by the Secretary of Labor, including workers covered by section 500.20(s)(1) of title 29, Code of Federal Regulations and retail workers employed exclusively during holiday seasons.
(C)For purposes of this paragraph—
(i)All persons treated as a single employer under subsection (b), (c), (m), or (o) of section 414 of the Internal Revenue Code of 1986 shall be treated as 1 employer.
(ii)In the case of an employer which was not in existence throughout the preceding calendar year, the determination of whether such employer is an applicable large employer shall be based on the average number of employees that it is reasonably expected such employer will employ on business days in the current calendar year.
(iii)Any reference in this subsection to an employer shall include a reference to any predecessor of such employer.
(D)(i)The number of individuals employed by an applicable large employer as full-time employees during any month shall be reduced by 30 solely for purposes of calculating—
(I)the assessable payment under subsection (a), or
(II)the overall limitation under subsection (b)(2).
(ii)In the case of persons treated as 1 employer under subparagraph (C)(i), only 1 reduction under subclause (I) or (II) 11 So in original. Probably means subclause (I) or (II) of clause (i). shall be allowed with respect to such persons and such reduction shall be allocated among such persons ratably on the basis of the number of full-time employees employed by each such person.
(E)Solely for purposes of determining whether an employer is an applicable large employer under this paragraph, an employer shall, in addition to the number of full-time employees for any month otherwise determined, include for such month a number of full-time employees determined by dividing the aggregate number of hours of service of employees who are not full-time employees for the month by 120.
(F)Solely for purposes of determining whether an employer is an applicable large employer under this paragraph for any month, an individual shall not be taken into account as an employee for such month if such individual has medical coverage for such month under—
(i)chapter 55 of title 10, United States Code, including coverage under the TRICARE program, or
(ii)under a health care program under chapter 17 or 18 of title 38, United States Code, as determined by the Secretary of Veterans Affairs, in coordination with the Secretary of Health and Human Services and the Secretary.
(3)The term “applicable premium tax credit and cost-sharing reduction” means—
(A)any premium tax credit allowed under section 36B,
(B)any cost-sharing reduction under section 1402 of the Patient Protection and Affordable Care Act, and
(C)any advance payment of such credit or reduction under section 1412 of such Act.
(4)(A)The term “full-time employee” means, with respect to any month, an employee who is employed on average at least 30 hours of service per week.
(B)The Secretary, in consultation with the Secretary of Labor, shall prescribe such regulations, rules, and guidance as may be necessary to determine the hours of service of an employee, including rules for the application of this paragraph to employees who are not compensated on an hourly basis.
(5)(A)In the case of any calendar year after 2014, each of the dollar amounts in subsection (b) and paragraph (1) shall be increased by an amount equal to the product of—
(i)such dollar amount, and
(ii)the premium adjustment percentage (as defined in section 1302(c)(4) of the Patient Protection and Affordable Care Act) for the calendar year.
(B)If the amount of any increase under subparagraph (A) is not a multiple of $10, such increase shall be rounded to the next lowest multiple of $10.
(6)Any term used in this section which is also used in the Patient Protection and Affordable Care Act shall have the same meaning as when used in such Act.
(7)For denial of deduction for the tax imposed by this section, see section 275(a)(6).
(d)(1)Any assessable payment provided by this section shall be paid upon notice and demand by the Secretary, and shall be assessed and collected in the same manner as an assessable penalty under subchapter B of chapter 68.
(2)The Secretary may provide for the payment of any assessable payment provided by this section on an annual, monthly, or other periodic basis as the Secretary may prescribe.
(3)The Secretary shall prescribe rules, regulations, or guidance for the repayment of any assessable payment (including interest) if such payment is based on the allowance or payment of an applicable premium tax credit or cost-sharing reduction with respect to an employee, such allowance or payment is subsequently disallowed, and the assessable payment would not have been required to be made but for such allowance or payment.
(4)The Secretary shall allow an applicable large employer at least 90 days from the date of the first letter which informs the employer of a proposed assessment of the employer shared responsibility payment under this section to respond to the proposed assessment before taking any further action with respect to such proposed assessment.
Legislative History
Notes & Related Subsidiaries
Editorial Notes
References in Text
The Patient Protection and Affordable Care Act, referred to in subsecs. (a)(2), (b)(1)(B), and (c)(3)(B), (C), (5)(A)(ii), (6), is Pub. L. 111–148, Mar. 23, 2010, 124 Stat. 119. section 1302(c)(4), 1402, 1411, and 1412 of the Act are classified to section 18022(c)(4), 18071, 18081, and 18082, respectively, of Title 42, The Public Health and Welfare. section 10108 of the Act enacted former section 139D of this title and section 18101 of Title 42, amended section 36B, 162, 4980H, 6056, and 6724 of this title and section 218b of Title 29, Labor, and enacted provisions set out as notes under section 36B, 162, 4980H, and 6056 of this title and former section 139D of this title. For complete classification of this Act to the Code, see
Short Title
note set out under section 18001 of Title 42 and Tables.
Amendments
2024—Subsec. (d)(4). Pub. L. 118–168 added par. (4). 2018—Subsec. (c)(2)(F). Pub. L. 115–141 substituted “Department of Veterans Affairs” for “Veterans Administration” in heading. 2015—Subsec. (c)(2)(F). Pub. L. 114–41 added subpar. (F). 2011—Subsec. (b)(3). Pub. L. 112–10 struck out par. (3). Text read as follows: “No assessable payment shall be imposed under paragraph (1) for any month with respect to any employee to whom the employer provides a free choice voucher under section 10108 of the Patient Protection and Affordable Care Act for such month.” 2010—Subsec. (b). Pub. L. 111–152, § 1003(d), redesignated subsec. (c) as (b) and struck out former subsec. (b) which related to large employers with enrollment waiting periods exceeding 60 days. Pub. L. 111–148, § 10106(e), amended subsec. (b) generally. Prior to amendment, subsec. (b) related to large employers with enrollment waiting periods exceeding 30 days. Subsec. (c). Pub. L. 111–152, § 1003(d), redesignated subsec. (d) as (c). Former subsec. (c) redesignated (b). Subsec. (c)(1). Pub. L. 111–152, § 1003(b)(1), substituted “an amount equal to 1⁄12 of $3,000” for “400 percent of the applicable payment amount” in concluding provisions. Subsec. (c)(3). Pub. L. 111–148, § 10108(i)(1)(A), added par. (3). Subsec. (d). Pub. L. 111–152, § 1003(d), redesignated subsec. (e) as (d). Former subsec. (d) redesignated (c). Subsec. (d)(1). Pub. L. 111–152, § 1003(b)(2), substituted “$2,000” for “$750”. Subsec. (d)(2)(D). Pub. L. 111–152, § 1003(a), amended subpar. (D) generally. Prior to amendment, text read as follows: “In the case of any employer the substantial annual gross receipts of which are attributable to the
Construction
industry— “(i) subparagraph (A) shall be applied by substituting ‘who employed an average of at least 5 full-time employees on business days during the preceding calendar year and whose annual payroll expenses exceed $250,000 for such preceding calendar year’ for ‘who employed an average of at least 50 full-time employees on business days during the preceding calendar year’, and “(ii) subparagraph (B) shall be applied by substituting ‘5’ for ‘50’.” Pub. L. 111–148, § 10106(f)(2), added subpar. (D). Subsec. (d)(2)(E). Pub. L. 111–152, § 1003(c), added subpar. (E). Subsec. (d)(4)(A). Pub. L. 111–148, § 10106(f)(1), inserted “, with respect to any month,” after “means”. Subsec. (d)(5)(A). Pub. L. 111–152, § 1003(b)(3), substituted “subsection (b) and paragraph (1)” for “subsection (b)(2) and (d)(1)” in introductory provisions. Subsec. (e). Pub. L. 111–152, § 1003(d), redesignated subsec. (e) as (d).
Statutory Notes and Related Subsidiaries
Effective Date
of 2024 Amendment Pub. L. 118–168, § 4(b), Dec. 23, 2024, 138 Stat. 2587, provided that: “The amendment made by this section [amending this section] shall apply to assessments proposed in taxable years beginning after the date of the enactment of this Act [Dec. 23, 2024].”
Effective Date
of 2015 Amendment Pub. L. 114–41, title IV, § 4007(a)(2),
July 31, 2015, 129 Stat. 466, provided that: “The amendment made by this subsection [amending this section] shall apply to months beginning after
December 31, 2013.”
Effective Date
of 2011 AmendmentAmendment by Pub. L. 112–10 effective as if included in the provisions of, and the
Amendments
made by, the provisions of Pub. L. 111–148 to which it relates, see section 1858(d) of Pub. L. 112–10, set out as a note under section 36B of this title.
Effective Date
of 2010 Amendment Pub. L. 111–148, title X, § 10106(f)(3), Mar. 23, 2010, 124 Stat. 911, provided that: “The amendment made by paragraph (2) [amending this section] shall apply to months beginning after
December 31, 2013.” Pub. L. 111–148, title X, § 10108(i)(1)(B), Mar. 23, 2010, 124 Stat. 914, provided that: “The amendment made by this paragraph [amending this section] shall apply to months beginning after
December 31, 2013.”
Effective Date
Pub. L. 111–148, title I, § 1513(d), Mar. 23, 2010, 124 Stat. 256, provided that: “The
Amendments
made by this section [enacting this section] shall apply to months beginning after December 31, 2013.”
Reference
Citations & Metadata
Citation
26 U.S.C. § 4980H
Title 26 — Internal Revenue Code
Last Updated
Apr 6, 2026
Release point: 119-73