The Affordable Care Act (ACA) does not require employers to provide healthcare insurance for their employees. However, it requires employers to share healthcare responsibility by either providing coverage or paying penalties. Under ACA’s employer mandate (also known as the “play-or-pay” provision), Applicable Large Employers (ALEs) must decide if they want to “play” by providing affordable, adequate coverage to substantially all of their full-time employees—or pay fines assessed under IRC Section 4980H.
As of 2016, ALEs with 50 or more employees must contend with penalties under the play-or-pay provision.
Penalty for failure to play. If an ALE does not offer coverage and has at least one full-time employee who uses financial assistance to obtain healthcare coverage through an insurance exchange, the employer will be assessed a monthly fee of 1/12 of approximately $2,000 annually (the number is regularly adjusted for inflation) per each full-time employee (26 USC 4980H(a) and 26 CFR 54.4980H-4). This fee is referred to as an assessable payment and is $2,080 for 2015 and $2,160 for 2016.
The first 30 full-time employees are not counted when assessing the fee.
An ALE that offers coverage, but in any month has at least one full-time employee receiving financial assistance to pay for coverage because the employer coverage did not meet minimum value or affordability standards, will be assessed a monthly fee of 1/12 of approximately $3,000 annually (the number is regularly adjusted for inflation) for each employee receiving assistance, but not more than it would have had to pay had it not provided coverage at all (approximately $2,000 annually for each full-time employee; see above for the ...