Calculate Penalties Under the Affordable Care Act

Key Points

  • Beginning in 2015, an employer with at least 100 full-time employees, including full-time equivalent employees (FTEs), is subject to the employer shared responsibility requirements under the Affordable Care Act if it does not offer adequate and affordable health coverage to at least 70 percent of its full-time employees.
  • Beginning in 2016, the shared responsibility requirements apply to employers with at least 50 full-time employees and FTEs, which must offer coverage to at least 95 percent of their full-time employees.
  • The employer shared responsibility provisions, also known as "pay or play," require an employer to either "play" by offering affordable health coverage that provides a minimum level of coverage to full-time employees and their dependents, or "pay" a shared responsibility penalty if at least one full-time employee receives a premium tax credit or cost sharing assistance to purchase coverage through the health insurance marketplace.
  • The decision to "pay or play" is complex and goes beyond comparing the cost of the penalty to the cost of providing insurance.

Additional Resources