ACA 2026 Open Enrollment: Why Accuracy on Your Marketplace Application Matters More Than Ever

As the ACA 2026 Open Enrollment Period (OEP) begins, it’s more important than ever to answer every Marketplace question carefully.

A small mistake—like saying your employer coverage is “too expensive” when it’s actually affordable—can lead to major financial consequences for both you and your employer.

Understanding ACA Affordability Rules for 2026

For plan year 2026, the IRS affordability threshold is 9.96% of household income.

That means if your share of the employee-only premium for your lowest-cost employer plan is less than 9.96% of your household income, that plan is considered affordable under ACA rules.¹

Here’s where confusion often arises:

• The Marketplace (HealthCare.gov) uses this same IRS affordability rate to decide if you qualify for premium tax credits (APTC).

• The IRS, on the employer side, allows employers to use safe harbors—such as W-2, Rate-of-Pay, or Federal Poverty Level (FPL)—to determine affordability for compliance and penalty protection. ²

While the Marketplace and employer formulas are related, they’re not identical.

So, a plan that feels unaffordable personally may still meet ACA affordability under federal guidelines.

Why This Matters

Many employers now use non-traditional health plans, such as:

• Limited medical or fixed indemnity plans

• MEC (Minimum Essential Coverage) plans

These options can lower employer costs, but they may not provide full major medical coverage or cover pre-existing conditions.

When employees misunderstand these plans and report to the Marketplace that their employer coverage is “too expensive” or “not traditional,” both sides can face serious consequences.

The Hidden Costs: Penalty A and Penalty B

If the Marketplace grants you APTC based on incorrect information, and the IRS later determines that your employer coverage was affordable:

• Employees may need to repay the APTC at tax time (through IRS Form 8962). ³

• Employers could receive an Employer Shared Responsibility Penalty—known as Penalty B—if an employee receives APTC for a month when affordable coverage was offered. ⁴

How Employees Can Protect Themselves

1. Verify before applying.
   Confirm with your HR or benefits administrator whether your plan meets ACA affordability and minimum value standards.

2. Use official tools.
   Check affordability with the Marketplace calculator or ask your employer for the employee-only premium amount.

3. Keep documentation.
   Save your employer’s offer letter, Summary of Benefits (SBC), and affordability statement in case the IRS requests proof.

How Employers Can Prevent Penalties

Employers can avoid ESRP penalties by:

• Offering Minimum Essential Coverage (MEC): Ensure that at least 95% of full-time employees (and their dependents) are offered MEC.

• Providing Affordable Coverage: The employee’s required contribution for self-only coverage under the lowest-cost plan must not exceed 9.96% of their household income for 2026.

• Ensuring Minimum Value (MV): The plan must cover at least 60% of the total allowed cost of benefits.

2025 ESRP Penalty Amounts:

• Section 4980H(a): If an employer fails to offer MEC to at least 95% of full-time employees and their dependents, and at least one full-time employee receives a premium tax credit through the Marketplace, the employer may owe a penalty of $2,900 per full-time employee (minus the first 30 employees).

• Section 4980H(b): If the employer offers MEC but the coverage is either unaffordable or does not provide MV, and at least one full-time employee receives a premium tax credit, the employer may owe a penalty of $4,350 per affected employee.

2026 ESRP Penalty Amounts:

• Section 4980H(a): The penalty increases to $3,340 per full-time employee (minus the first 30 employees).

• Section 4980H(b): The penalty increases to $5,010 per affected employee.

These increases underscore the importance for employers to review and adjust their health insurance offerings to ensure compliance and avoid significant penalties.

How Employers Can Prevent Penalties

1. Communicate clearly.
   Explain what type of plan is being offered and whether it meets ACA’s minimum value and affordability standards.

2. Provide written notices.
   Give employees clear documentation about plan affordability and MEC status.

3. Maintain records.
   Keep copies of plan offers, affordability calculations, and employee elections to defend against potential IRS inquiries.

4. Review annually.
   Confirm your plan remains compliant with the latest IRS thresholds and penalty adjustments each plan year.

The Bottom Line

Accuracy during ACA OEP 2026 protects both you and your employer.

A single checkbox or misinterpreted question can lead to repaying tax credits or triggering employer penalties.

Take time to confirm your answers, use official calculators, and consult a licensed health insurance professional before submitting your Marketplace application.

References

1. IRS Rev. Proc. 2024-29, Section 36B – Applicable Percentage Table and Premium Tax Credit Parameters for Plan Year 2026 (affordability rate = 9.96%).

2. 26 C.F.R. § 54.4980H-5 – Employer Shared Responsibility Safe Harbors (W-2, Rate-of-Pay, FPL).

3. IRS Form 8962 Instructions – Premium Tax Credit (PTC) Reconciliation.

4. IRS § 4980H(b) – Employer Shared Responsibility Payment (“Penalty B”) conditions.