Play or Pay under the ACA
Rising health insurance premiums have plagued employers for several years. There is significant fear over future costs. Upcoming requirements under the Affordable Care Act will place employers in a position of balancing those costs with potential federal penalties.
Beginning in 2014, large employers may be penalized if they do not offer full-time employees and their dependents minimum essential coverage or offer coverage that is deemed unaffordable. A “large employer” is defined as one that has 50 or more full-time equivalent employees during the preceding calendar year. A full-time employee averages 30 or more weekly hours of work. Hours worked by part-time employees are included in the calculation. These penalties amount to $2,000 per year per full-time employee (starting with employee number 31).
Coverage is “unaffordable” when:
- the employee’s share of the premium for self-coverage is more than 9.5 percent of the employee’s modified adjusted gross household income, and
- an employee receives a subsidy for coverage through a state exchange.
If coverage is not affordable, employers may be penalized $3,000 per year per employee who receives a federal individual insurance subsidy.