Form 8928 is the IRS return that employers and group health plan sponsors use to report and pay excise taxes under Chapter 43 of the Internal Revenue Code.1Internal Revenue Service. About Form 8928, Return of Certain Excise Taxes Under Chapter 43 of the Internal Revenue Code The taxes fall into four buckets: failure to offer COBRA continuation coverage, failure to meet group health plan portability and market reform requirements, and failure to make comparable employer contributions to employee Archer MSAs or HSAs. Penalties run $100 per day per affected individual for the first two categories and 35% of aggregate contributions for the last two. The form is filed on paper, and the due date depends on which failure you’re reporting.
Who Files Form 8928, and Who Doesn’t
Only employers and plan sponsors file Form 8928. If you personally overcontributed to your own HSA or Archer MSA, that 6% excise tax goes on Form 5329 with your individual return, not here.2Internal Revenue Service. Publication 969 – Health Savings Accounts and Other Tax-Favored Health Plans Prohibited transactions in your own HSA, like using the account as loan collateral, also flow through Form 5329.
Form 8928 exists for failures at the plan level. If you administer a group health plan, sponsor one, or run the HR function that decides how employer HSA contributions get made, this is your form. Third-party administrators and insurers can sometimes be on the hook for COBRA failures, but only where they took on the specific failed act under a legally enforceable written agreement. The employer almost always carries the primary exposure.3Office of the Law Revision Counsel. 26 U.S. Code 4980B – Failure to Satisfy Continuation Coverage Requirements
The Four Failures the Form Covers
Form 8928 is divided into four parts, each tied to a different Code section.
Part I covers COBRA continuation coverage failures under Section 4980B. COBRA generally applies to employers with 20 or more employees and requires temporary continuation of coverage after qualifying events such as job loss, reduced hours, death, or divorce.4U.S. Department of Labor. Continuation of Health Coverage (COBRA) Missing an election notice or refusing continuation to a qualified beneficiary triggers the tax. For a multiemployer plan, the plan itself is liable rather than any individual employer.
Part II covers group health plan requirement failures under Section 4980D. These are the tax-code counterparts to HIPAA, the Affordable Care Act, and the Mental Health Parity and Addiction Equity Act.5Internal Revenue Service. Instructions for Form 8928 – Return of Certain Excise Taxes Under Chapter 43 of the Internal Revenue Code Common triggers include denying a special enrollment period after marriage, birth, adoption, or loss of other coverage; setting eligibility or premiums based on health status; charging cost-sharing for in-network preventive services; imposing annual dollar limits on essential health benefits;6eCFR. 45 CFR 147.126 – No Lifetime or Annual Limits and applying more restrictive treatment limitations to mental health or substance use disorder benefits than to medical and surgical benefits.7Office of the Law Revision Counsel. 26 USC 4980D – Failure to Meet Certain Group Health Plan Requirements Parity trips plans up most often on non-quantitative treatment limitations, like requiring prior authorization for all inpatient substance use treatment but only for select medical procedures.
Parts III and IV cover comparable contribution failures for HSAs and Archer MSAs. When an employer contributes to employee HSAs outside a Section 125 cafeteria plan, the contributions must be either the same dollar amount or the same percentage of the HDHP deductible for all comparable participating employees.8GovInfo. 26 CFR 54.4980G-2 – HSA Comparability Rules Comparable employees are those with the same category of HDHP coverage (self-only or family) during the same period. Employers are allowed to give more to non-highly compensated employees than to highly compensated employees without breaking the rule.
One large carve-out matters here: employer HSA contributions made through a Section 125 cafeteria plan, including matching contributions, are exempt from the comparability rules entirely.9eCFR. 26 CFR 54.4980G-5 – HSA Comparability Rules and Cafeteria Plans and Waiver of Excise Tax Because most employers already route HSA contributions through their cafeteria plans, Parts III and IV don’t come into play for them. Section 125 nondiscrimination rules apply instead.
How Much the Excise Tax Costs
The math depends on which part of the form you’re filing.
Daily Penalties for COBRA and Group Health Plan Failures
Under Sections 4980B and 4980D, the tax is $100 per day for each affected individual, running from the day the failure begins through the day it’s corrected.7Office of the Law Revision Counsel. 26 USC 4980D – Failure to Meet Certain Group Health Plan Requirements Multiply days by affected individuals by $100. An employer that denies special enrollment to 10 employees for 60 days is looking at $60,000 in gross tax.
If the failure isn’t corrected before the IRS mails a notice of examination, a minimum tax kicks in: the lesser of $2,500 or the calculated amount, jumping to $15,000 when the violations are more than de minimis.
The 35% Penalty for Comparable Contribution Failures
The comparability penalty is 35% of the employer’s aggregate contributions to all employee HSAs or Archer MSAs for the calendar year.10Office of the Law Revision Counsel. 26 USC 4980E – Failure of Employer to Make Comparable Archer MSA Contributions Not 35% of the non-comparable portion. 35% of the whole pot. An employer that put $200,000 into employee HSAs during the year and failed comparability owes $70,000 in excise tax, even if only a handful of employees received unequal amounts.
Ways to Reduce or Eliminate the Tax
Congress built in several safety valves, and they matter enormously in practice.
The 30-Day Correction Safe Harbor
No excise tax is imposed on a Section 4980B or 4980D failure that was due to reasonable cause and not willful neglect, if the employer corrects it within 30 days of the date the employer knew or should have known about it. This is a complete safe harbor, not a reduction. Fix it fast and the tax is zero. Church plans get a longer correction window tied to Section 414(e)(4)(C) rather than the standard 30 days.
Small Employer Exception
Employers that averaged 2 to 50 employees during the preceding calendar year and provide coverage solely through a health insurance contract are exempt from the Section 4980D tax when the failure is solely attributable to the insurer’s coverage. Mental health parity failures under Section 9811 are the exception to the exception; the small employer relief does not apply there. A small, fully insured employer whose insurer builds a noncompliant plan is generally shielded from the tax, except on parity.
Annual Cap for Unintentional Failures
For COBRA and group health plan failures not caused by willful neglect, the excise tax for any single employer in any taxable year is capped at the lesser of 10% of what the employer paid for group health plans during the preceding year, or $500,000. Most large employers hit the $500,000 ceiling first. Willful neglect removes the cap entirely.
Discretionary IRS Waiver
Even if the 30-day window has closed, the IRS can waive part or all of the tax where the failure was due to reasonable cause and the tax would be excessive relative to the failure.11GovInfo. 26 USC 4980D – Failure to Meet Certain Group Health Plan Requirements There’s no separate waiver form. You attach a statement to Form 8928 describing the failure, the timeline, the corrective steps, and the facts that support reasonable cause. The agency looks at whether the employer exercised ordinary business care and prudence and still couldn’t meet the requirement. Reliance on incorrect professional advice, destruction of records, and errors that occurred despite reliable plan administration systems all cut in the employer’s favor. Documentation is the whole game.
When Form 8928 Is Due
Three different deadlines apply, depending on the failure and the filer.5Internal Revenue Service. Instructions for Form 8928 – Return of Certain Excise Taxes Under Chapter 43 of the Internal Revenue Code
- COBRA or group health plan failures by a single employer: the due date of the employer’s federal income tax return. For a calendar-year corporation, that’s typically April 15.
- COBRA or group health plan failures by a multiemployer or multiple employer plan: the last day of the seventh month after the end of the plan year.
- Comparable contribution failures for HSAs or Archer MSAs: the 15th day of the fourth month following the calendar year in which the noncomparable contributions were made. For 2025 contributions, that’s April 15, 2026.
Form 7004 gets you an automatic six-month extension, but the request has to be filed before the original due date, and it extends only the filing deadline.12Internal Revenue Service. Instructions for Form 7004 The tax itself is still due on the original date, and any unpaid balance accrues interest and penalties.
Form 8928 cannot be filed electronically through the IRS Modernized e-File platform as of early 2026.13Internal Revenue Service. Modernized e-File (MeF) Forms Paper filing is required. The mailing address depends on the filer’s location and entity type, so check the current year’s instructions. Payment can be made by check payable to the U.S. Treasury or through EFTPS.
Late Filing and Late Payment Penalties
Missing the deadline stacks additional penalties on top of the excise tax. The failure-to-file penalty is 5% of the unpaid tax per month, capped at 25%.14Internal Revenue Service. Instructions for Form 8928 File more than 60 days late and the minimum penalty is the lesser of the tax due or $525.
The failure-to-pay penalty runs concurrently at 0.5% of the unpaid tax per month, also capped at 25%.15Internal Revenue Service. Topic No. 653, IRS Notices and Bills, Penalties and Interest Charges That rate rises to 1% per month once the IRS issues a notice of intent to levy and you don’t pay within 10 days. Interest accrues on unpaid balances at 7% per year, compounded daily, for the first quarter of 2026.16Internal Revenue Service. Interest Rates Remain the Same for the First Quarter of 2026
If you catch a failure now, the correction clock is often more valuable than any other lever on the form. Fix it inside 30 days and the tax is zero. Miss that window and the calculation, the caps, the waiver request, and the deadlines above are what shape the bill.