What are employers' responsibilities under health reform?

Many members came to us with questions after the Supreme Court ruled to uphold the Affordable Care Act in June. One common set of questions we received pertained to employers' responsibilities under the law—specifically, which ones will be subject to the ACA's penalties in 2014 if they fail to offer affordable health coverage.

The Health Care Advisory Board and Health Care Industry Committee offer this answer:

For employers with fewer than 50 employees
The ACA's penalty will not apply to the employer. Importantly, small employers that have fewer than 26 employees and offer average wages of $50,000 or less may be eligible for health insurance tax credits.

For employers with more than 50 full-time employees
The penalty is $2,000 annually times the number of full-time employees minus 30. The ACA also calls for plans to increase the penalty each year to mirror the growth in insurance premiums.

For employers with 50 full-time employees who offer insurance but it is not affordable
The ACA imposes penalties on larger employers whose workers need to stop for health insurance through an exchange. For a firm where employees are seeking out insurance from the exchanges and therefore receive a tax credit, the employer will be penalized $3,000 per employee who receiving a tax credit.

The ACA sets a maximum on these penalties at $2,000 times the number of full-time employees minus 30.

Additional resources

We also recommend that members review this IRS resource for a breakdown of tax provisions that were established by the ACA as well as information on grandfathered plans, coverage of family members under the age of 26 and employer tax credit.


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