ACA Penalties, Affordability Rates Adjusted: Various Resources Updated
Author: Tracy Morley, XpertHR Legal Editor
An employer is subject to "pay or play" penalties under the Affordable Care Act (ACA) if the health care coverage it offers does not provide minimum value or is not considered affordable. The Internal Revenue Service (IRS) has adjusted the penalties for inflation and equalized the rate for determining affordability for 2015 and 2016.
The law set the no-coverage penalty at $2,000 and the unaffordable/inadequate coverage penalty at $3,000 for each employee. The no-coverage penalty is adjusted to $2,080 for 2015 and $2,160 for 2016, while the unaffordable/inadequate coverage penalty is $3,120 for 2015 and $3,240 for 2016.
Coverage is considered affordable if an employee's monthly contribution for single coverage for the lowest cost option available that also provides minimum value does not exceed 9.56 percent (for 2015) or 9.66 percent (for 2016).
In light of these developments, the following resources have been updated:
- What Employers Should Know About the Affordable Care Act (ACA);
- How to Determine If Coverage an Employer Offers Is Sufficient to Avoid Pay or Play Penalty Under the Affordable Care Act;
- How to Determine Full-Time Employee Status Using the Look-Back Measurement Method and Evaluate Pay or Play Penalties;
- Calculating Penalties Under the Affordable Care Act - Worked Example;
- Determine If a Penalty Is Owed Under the Affordable Care Act;
- Under what circumstances will an employee receive a premium credit under the Affordable Care Act?;
- How does an employer determine whether the cost of its group health plan meets the affordability requirements under the Affordable Care Act (ACA)?;
- What is the penalty under the Affordable Care Act (ACA) for an employer that offers health coverage that is not considered affordable or does not provide minimum value?;
- What is the penalty under the Affordable Care Act (ACA) for an employer that does not offer health coverage?; and
- Are there alternative methods of reporting available to employers under Section 6056?.