PENALTIES
Beginning in 2015, large employers (generally those with at least 50 full-time employees) who do not offer affordable health insurance that provides a minimum level of coverage to their full-time employees will be subject to a “play or pay” penalty that will be imposed the following year. Also known as an employer shared responsibility payment, the penalty is triggered if at least one full-time employee receives a premium tax credit or cost-sharing reduction for purchasing individual coverage through one of the Health Insurance Exchanges.
- Large employers that do not offer minimum essential coverage to their full-time employees (and their dependents) will be subject to a monthly penalty if any full-time employee receives subsidized coverage through an Exchange. The penalty for not offering coverage is generally equal to $2,000 for each full-time employee, not counting the first 80 full-time employees in 2015, the first 30 in 2016 and later.
- Large employers that do offer their full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage may be subject to a penalty if the employer-sponsored coverage does not provide “minimum value” or is “unaffordable” and one or more full-time employees receive subsidized coverage through an exchange. The penalty will be the lesser of $3,000 for each of those certain full-time employees or $2,000 for each full-time employee in excess of 80 employees in 2015, in excess of 30 employees in 2016 and later.
- Fully insured plan sponsors that violate the nondiscrimination rules will be subject to a $100-per-day per-failure penalty, which will likely apply to each non-highly compensated employee who is impermissibly excluded under the plan.
IMPORTANT: If an employee is enrolled in an eligible employer-sponsored plan, the employee will NOT be eligible for a subsidy.
According to the regulation, the term dependent means a child of an employee who has not attained age 26. Applicable large employers may rely on an employee’s representation about that employee’s children and the ages of those children. Dependent does not include the spouse or domestic partner of an employee.
FOR MORE INFORMATION
HCRAdvisor_Talking-Points_Doing-the-Math
HCRAdvisor_Shared Responsibility_Flowchart
Potential Employer Penalties under the Patient Protection and Affordable Care Act (ACA)