The ACA does not explicitly mandate that all employers have to offer medical coverage. However, under the reform law, there are two potential penalties.
Keep in mind that an employer may continue to offer several plan design options to its employees. To avoid the possibility of penalties, only one of those plans needs to meet the requirements of the employer mandate (MEC, minimum value and affordability) – not all of the plans offered – as long as that plan meets the requirements and is offered to all full-time employees and their dependents. The penalties are calculated as follows:
Penalty A: Employers not offering medical coverage that provides MEC or any health insurance coverage
First, if an employer with 50 or more employees does not provide minimum essential coverage and any of those full-time employees and/or their dependents goes to an Exchange, also called a Health Insurance Marketplace, and qualifies for a premium tax credit or cost-sharing reduction, the employer is subject to a penalty. If an employer does not offer any health benefits coverage or medical coverage that provides MEC and one or more fulltime employee or dependent(s) qualifies for a premium tax credit or cost-sharing reduction through the Exchange, the annual penalty is $2,000 per year, per full-time employee. When calculating the penalty, the first 30 full-time employees are subtracted from the payment calculation. This penalty is assessed per full-time employee for each month an employer does not offer coverage, or minimum essential coverage, to its employees.
Penalty B: Employers offering unaffordable coverage
Second, if the health insurance coverage you offer is unaffordable, or does not meet minimum value according to the employer mandate requirements, for even just one employee, and that employee qualifies for a premium tax credit or costsharing reduction through an Exchange, the employer could be subject to a penalty. This second penalty is only calculated on the number of full-time employees and eligible dependents receiving a subsidy. If an employer offers MEC but the full-time employee’s contribution is deemed unaffordable and does not provide minimum value, full-time employees may obtain health insurance through an Exchange and qualify for a premium credit or cost-sharing reduction. The annual penalty of $3,000 per year, per full-time employee would apply if an employee applied to the Exchange and was deemed eligible for a subsidy. This penalty is assessed per full-time employee who receives a premium tax credit or cost-sharing reduction for each month the employee qualifies for such assistance.
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