Premium Tax Credits and Employees

Posted by BAS - 16 March, 2023


Under the Affordable Care Act, Applicable Large Employers (those with 50 or more full-time employees) must offer affordable, minimum essential health coverage to all full-time employees and their dependents. If an employee who was not offered affordable health coverage receives a premium tax credit for purchasing Marketplace coverage, the employer will be assessed a large tax penalty.

The premium tax credit is a refundable tax credit to help eligible individuals and families with low or moderate income afford health insurance purchased through the Marketplace. The size of the premium tax credit is based on a sliding scale. People who have a lower income get a larger credit to help cover the cost of their health coverage.

The number of individuals eligible for the premium tax credit assistance has increased over the years. Therefore, it is more and more important for employers to calculate their full-time employees properly and offer coverage to those employees. Employers will not want to be in a position of having to pay a tax penalty for an employee who should have been offered health coverage was not offered coverage.

The IRS updated its Frequently Asked Questions on information an employee needs to claim a premium tax credit for Marketplace coverage. A copy of those FAQs may be accessed by clicking here.

Topics: Health Care Reform (ACA), Affordable Care Act, HR & Benefit Plans, HR & Benefits News

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