Penalty transition relief is over for most employers. To avoid potential penalties it is especially important for applicable large employers (ALE) (50+ FTEs) to comply with the ACA’s employer shared responsibility (AKA: Employer Mandate) rules moving forward.

Depending on the circumstances, one of two penalties may apply under the employer shared responsibility rules if at least one full-time employee receives a subsidy for coverage purchased through an Exchange.

1. A monthly penalty is assessed on ALEs that DO NOT offer coverage to substantially all full-time employees (95% of FTEs) and their dependents equal to the ALE’s number of full-time employees (minus 30) X 1/12 of $2,000 (as adjusted), for any applicable month. After 2014, the $2,000 amount is indexed for the calendar year, as follows:

    • For 2015, $2,080
    • For 2016, $2,160
    • 2017 adjusted dollar amount has not yet been release

2. Employers that DO offer coverage to substantially all full-time employees (and dependents) may still be subject to penalties if at least one full-time employee obtains a subsidy through an Exchange because: The employer did not offer coverage to all full-time employees; or the employer’s coverage is not affordable or does not provide minimum value. This monthly penalty is assessed on an ALE for each full-time employee who actually receives a premium credit. The penalty is 1/12 of $3,000 (as adjusted) per applicable employee for each month appropriate coverage is not offered. However, the total penalty for an employer is limited to the amount of penalty 1. After 2014, the $3,000 dollar amount is indexed as follows:

    • For 2015, $3,120
    • For 2016, $3,240
    • 2017 adjusted dollar amount has not yet been released
 
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