November 7, 2017 Associated Payroll

ACA Penalty Updates

Under the ACA, a large employer must offer “affordable” medical coverage to at least 95%of its full-time employees and their dependent children, age 26 or younger or face stiff penalties.

  • A penalty of $2,260 per full-time employee (minus the first 30) if the employer fails to offer minimum essential coverage to 95 percent of its full-time employees and their dependents and any full-time employee obtains coverage on the exchange.
  • A penalty of $3,390 per full-time employee (minus the first 30) if a full-time employee receives a premium tax credit because the employer offered coverage that was unaffordable or did not provide minimum value.

These penalties, which took effect Jan. 1, 2016, go up in 2018 to $2,320 for the first penalty and $3,480 for the second. An employer may be subject to one of these penalties, not both. Employers that previously defined a full-time employee based on 40 hours of service have had to adjust their definition of full-time to 30 hours to comply with the employer mandate.


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