Internal Revenue Code · 26 U.S.C.

§ 4980H. Shared responsibility for employers regarding health coverage

In force Text current through Public Law 119-121 (October 9, 2026) release point 119-121

Official text, no changes From the Office of the Law Revision Counsel, release point 119-121 (current through Public Law 119-121 (October 9, 2026)). Compare it with the official text at uscode.house.gov (external site).

Cite as 26 U.S.C. § 4980H

At a glance

Read from the text, the source credit and the official notes. Not part of the law.

Status: In force
Added: March 23, 2010 by Pub. L. 111–148
Last amended: December 23, 2024 by Pub. L. 118–168
Amendments: 5 dated changes in the source credit
Length: 4 subsections · 1,538 words · about 7 min to read
Defines: 5 terms
Cross-references: cites 3; cited by 5 Code sections and 8 other regulations
Regulations: 7 issued under this section

¶(a) Large employers not offering health coverage 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,

then there is hereby imposed on the employer an assessable payment equal to the product of the applicable payment amount and the number of individuals employed by the employer as full-time employees during such month.

¶(b) Large employers offering coverage with employees who qualify for premium tax credits or cost-sharing reductions

¶(1) In general 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,

then there is hereby imposed on the employer an assessable payment equal to the product of the number of full-time employees of the applicable large employer described in subparagraph (B) for such month and an amount equal to ¹⁄₁₂ of $3,000.

¶(2) Overall limitation

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) Definitions and special rules For purposes of this section—

¶(1) Applicable payment amount

The term “applicable payment amount” means, with respect to any month, ¹⁄₁₂ of $2,000.

¶(2) Applicable large employer

¶(A) In general

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) Exemption for certain employers

¶(i) In general 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) Definition of seasonal workers

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) Rules for determining employer size For purposes of this paragraph—

¶(i) Application of aggregation rule for employers

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) Employers not in existence in preceding year

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) Predecessors

Any reference in this subsection to an employer shall include a reference to any predecessor of such employer.

¶(D) Application of employer size to assessable penalties

¶(i) In general 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) Aggregation

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) Full-time equivalents treated as full-time employees

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) Exemption for health coverage under TRICARE or the Department of Veterans Affairs 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) Applicable premium tax credit and cost-sharing reduction The term “” 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) Full-time employee

¶(A) In general

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) Hours of service

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) Inflation adjustment

¶(A) In general 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) Rounding

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) Other definitions

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) Tax nondeductible

For denial of deduction for the tax imposed by this section, see section 275(a)(6).

¶(d) Administration and procedure

¶(1) In general

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) Time for payment

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) Coordination with credits, etc.

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) Time for response

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.

(Added and amended Pub. L. 111–148, title I, § 1513(a), title X, §§ 10106(e)–(f)(2), 10108(i)(1)(A), Mar. 23, 2010, 124 Stat. 253, 910, 914; Pub. L. 111–152, title I, § 1003, Mar. 30, 2010, 124 Stat. 1033; Pub. L. 112–10, div. B, title VIII, § 1858(b)(4), Apr. 15, 2011, 125 Stat. 169; Pub. L. 114–41, title IV, § 4007(a)(1), July 31, 2015, 129 Stat. 465; Pub. L. 115–141, div. U, title IV, § 401(a)(2)(B), Mar. 23, 2018, 132 Stat. 1184; Pub. L. 118–168, § 4(a), Dec. 23, 2024, 138 Stat. 2587.)

Terms defined here

Where the text says “the term … means”. Select a term to jump to its definition.

applicable large employer § 4980H(c)(2)(A)
applicable payment amount § 4980H(c)(1)
applicable premium tax credit and cost-sharing reduction § 4980H(c)(3)
full-time employee § 4980H(c)(4)(A)
seasonal worker § 4980H(c)(2)(B)(ii)

Regulations under this section

Treasury regulations (26 CFR) issued under § 4980H

From Carry Forward Learning, not part of the law

Our pages that use this section

IRS notice guide

LTR 226-J: the IRS proposes an employer shared responsibility payment

Cross-references

Computed from the citations in the text of Title 26 and 26 CFR.

This section cites 3 other sections

Cited by 5 Code sections

Cited in 8 regulations not issued under it

Amendment history

From the source credit and the official notes, newest first.

December 23, 2024Amended by Pub. L. 118–168Parts changed in 2024: (d)(4)
March 23, 2018Amended by Pub. L. 115–141Parts changed in 2018: (c)(2)(F)
July 31, 2015Amended by Pub. L. 114–41Parts changed in 2015: (c)(2)(F)
April 15, 2011Amended by Pub. L. 112–10Parts changed in 2011: (b)(3)
March 30, 2010Amended by Pub. L. 111–152Parts changed in 2010: (b) (c) (c)(1) (c)(3) (d) (d)(1) (d)(2)(D) (d)(2)(E) (d)(4)(A) (d)(5)(A) (e)
March 23, 2010Added by Pub. L. 111–148

Where it sits in the Code

Nearby sections

§ 4980D Failure to meet certain group health plan requirements
§ 4980E Failure of employer to make comparable Archer MSA contributions
§ 4980F Failure of applicable plans reducing benefit accruals to satisfy notice requirements
§ 4980G Failure of employer to make comparable health savings account contributions
§ 4980H Shared responsibility for employers regarding health coverage
§ 4980I Repealed

Official notes

Show the Law Revision Counsel's notes (amendments, effective dates)

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. Sections 1302(c)(4), 1402, 1411, and 1412 of the Act are classified to sections 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 sections 36B, 162, 4980H, 6056, and 6724 of this title and section 218b of Title 29, Labor, and enacted provisions set out as notes under sections 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).

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 Amendment

Amendment 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.”