Determine If a Penalty Is Owed Under the Affordable Care Act
When to Use This Flowchart
Use the Determine if a Penalty Is Owed Under the Affordable Care Act flowchart to determine if an employer will owe a "shared responsibility" penalty under the Affordable Care Act (ACA).
Under the employer shared responsibility (often referred to as the "employer mandate" or the "pay or play" mandate) requirements of the ACA, an employer may need to decide whether to offer affordable health coverage that provides minimum value to its full-time employees and their dependents, or pay a penalty to the federal government (if at least one full-time employee receives subsidized coverage through the Health Insurance Marketplace) for failing to offer such coverage. Depending on the size of the employer's workforce, the penalties can be quite substantial.
This flowchart is valuable since it can help an employer determine if it is subject to the employer mandate, and if so, what the potential penalties might be based on the number of full-time employees. Since the decision to "pay or play" is complex and goes beyond comparing the cost of the penalty to the cost of providing coverage assessing the implications can also help an employer decide what is in the best interest for the organization and for the employees.
Key Steps
- Is the employer is an applicable large employer?
- Does the employer offer health coverage to full-time employees and their dependents?
- Does the plan offer coverage that is affordable?
- Does any full-time employee receive premium assistance?