Starting in 2015, employers that employ, on average, at least 50 full-time employees may be subject to a penalty if their employees receive a tax credit and purchase coverage through an Exchange.
- Minimum Essential Coverage. An employer that does not offer minimum essential health coverage to its full-time employees and their dependents may be subject to a “pay or play” penalty if one or more full-time employees enrolls in coverage through the Exchange and receives a premium tax credit or cost-sharing reduction for the Exchange coverage. The amount of the penalty is $166.67 per month ($2,000 per year) for each calendar month in which the employer fails to offer minimum essential coverage to at least 95% of its full-time employees, multiplied by the number of the employer’s full-time employees. The first 30 full-time employees are disregarded for calculating the penalty, and special rules apply in 2015.
- Affordable Coverage. If the employer’s coverage is deemed unaffordable, an employer may be subject to a pay or play penalty for each full-time employee who enrolls in coverage through the Exchange and receives a tax credit for the Exchange coverage. The pay or play penalty is $250 per month ($3,000 per year) for each month in which a full-time employee receives a subsidy through the Exchange.
Penalties will not be imposed until 2016 for employers who have between 50 and 100 employees. Large employers should review the structure of their health plan operations to make sure that benefits and costs do not subject them to the pay or play penalties.
