Penalties

An employer can fail to meet the employer mandate two different ways.

Employer Does Not Offer Health Insurance

Employers can choose to not offer health insurance at all.  In this case the employer will be subject to an assessable penalty if at least one employee receives a premium tax credit on the Individual Marketplace.  If no employee qualifies for a premium tax credit, then the employer will not be assessed any penalties.

The penalty will be equal to $2,000 times the (# of full time employees less 30).  Therefore an employer with 130 full time employees would be subject to a penalty of $200,000.  No penalties will be charged for part time employees.

A full time employee is one who works 130 hours in a month. The actual penalties will be determined and assessed on a monthly basis.

Employer Does Offer Health Insurance

If an employer offers health insurance but does not meet one of the additional requirements of Minimum Value, Affordability, and is offered to 95% of all full time employees, then this employer will be subject to an assessable penalty of $3,000 times the number of employees who receive a premium tax credit on the Individual Marketplace.

This penalty will never be more than the penalty for an employer who does not offer health insurance coverage.

Please note

  • If an employee makes more than 4 times the federal poverty level, he is not entitled to a premium subsidy so there is NO employer penalty.
  • If an employee does not get insurance on the Individual Marketplace, there is NO employer penalty.
  • If an employee has NO health insurance, there is NO employer penalty.

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