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Employer Shared Responsibility Penalties for 2019


On April 17, 2018 the Department of Health and Human Services (HHS), in conjunction with the Centers for Medicare & Medicaid Services (CMS), released the final rule for the Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2019. Based on the contents of this document, the potential penalties under employer shared responsibility (ESR) provisions 4980H(a) and 4980H(b) are $2,500 and $3,750, respectively.

Among other things, this document provided the 2019 premium adjustment percentage. This inflation-adjusting number is the percentage by which the most recent National Health Expenditure Accounts (NHEA) projection of per enrollee employer-sponsored insurance premiums for the preceding year exceeds the most recent NHEA estimate of per enrollee employer-sponsored insurance premiums for 2013. For 2019, the premium adjustment percentage is 25.16634051. This is up 7.7 percent from the 2018 premium adjustment percentage of 16.17303196.

Based on this premium adjustment percentage, ESR penalties can be estimated for 2019. These numbers are reached by multiplying the base penalty amount from 2014 ($2,000 for 4980H(a) and $3,000 for 4980H(b) penalties) by the premium adjustment percentage (1.2516634051). The Code’s rounding rule instructs us to round to the next lowest multiple of $10

The potential annual penalty for failure to offer coverage to at least 95% of full time employees, calculated per full time employee, minus 30 (Section 4980H(a)), is $2,500.

The potential annual penalty if coverage is offered by is not affordable or does not provide minimum value, calculated per full time employee who receives a subsidy (Section 4980H(b)), is $3,750.

For any questions on this issue, please contact Erin Reiter at

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Health Reform(09/02/15)