Introduction: Learn about the key provisions of the Affordable Care Act (ACA) that apply to applicable large employers (ALEs). ALEs must offer affordable minimum essential coverage that provides minimum value to their full-time employees and their dependents. Failure to comply with these requirements may result in tax penalties, known as "assessable payments." This article provides an overview of the penalties and their indexed amounts for 2023.
Section 1: Penalty for Failure to Offer Minimum Essential Coverage
An ALE member's failure to offer health coverage to at least 95% of its full-time employees and their dependents can lead to penalties. The penalty amount for 2023 is $240 per month ($2,880 per year) for each calendar month in which the employer fails to provide minimum essential coverage to the required percentage of full-time employees and their dependents. If at least one full-time employee receives a premium tax credit when purchasing coverage through a state or federal ACA marketplace, the penalty is applicable. The penalty is calculated on a monthly basis, considering all full-time employees of the ALE, minus 30.
Section 2: Penalty for Failure to Offer Minimum Essential Coverage that Provides Minimum Value
Employers may face penalties if their coverage is deemed unaffordable, fails to provide minimum value, or if an employee is not offered minimum essential coverage. The penalty is assessed for each full-time employee who receives a premium tax credit for purchasing coverage through a state or federal ACA marketplace. For 2023, the penalty is $360 per month ($4,320 per year) per employee. This penalty is applied to each employee who is offered insufficient or no coverage.
Conclusion: Compliance with ACA requirements is crucial for applicable large employers. Failing to offer affordable minimum essential coverage that provides minimum value can result in significant tax penalties. Employers must ensure that they provide coverage to the required percentage of full-time employees and their dependents, while also meeting affordability and value criteria. Staying updated on indexed penalty amounts is essential for effective compliance with ACA regulations. Many human resources professionals and group insurance brokers rely on BAS for MyEnroll360’s reporting and data collection which helps with ACA compliance.
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