An applicable large employer (ALE) must offer affordable minimum essential coverage that provides minimum value to its full-time employees and their dependents or pay a tax penalty (called an “assessable payment”).
Each separate employer member of the ALE group will be responsible for its own shared responsibility payment. A separate employer member is each location with its own taxpayer identification number (TIN).
- Penalty for Failure to Offer Minimum Essential Coverage An ALE member that does not offer health coverage to its full-time employees and their dependents may be subject to a penalty. The amount of the penalty for 2016 is $180 per month ($2,160 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 and their dependents. For plan years beginning before January 1, 2016, the penalty applied to an employer that failed to offer coverage to at least 70% of its full time employees and their dependents. The penalty is assessed on a monthly basis, and will be assessed based on all of the large employer’s full-time employees, minus 30 (minus 80 for 2015). It is subject to inflation increases.
- Penalty for Failure to offer Minimum Essential Coverage that Provides Minimum Value An employer might be liable for an employer shared responsibility payment for each full-time employee who receives a premium tax credit for purchasing coverage through the Exchange if the employer’s coverage is not affordable, if the coverage does not provide minimum value, or if the employee is not one of the 95% of employees who are offered minimum essential coverage. The penalty is assessed for each full-time employee who enrolls in coverage through the Exchange and receives a tax credit for the Exchange coverage. For 2016, the pay or play penalty is $270 per month ($3,240 per year) for each month in which a full-time employee who is not offered minimum value affordable coverage receives subsidized coverage on the Exchange.
These penalty amounts are indexed for inflation.
