Calculate Penalties Under the Affordable Care Act

Key Points

  • An employer with at least 50 full-time employees, including full-time equivalent employees (FTEs), is subject to the employer shared responsibility requirements under the Affordable Care Act (ACA) if it does not offer adequate and affordable health coverage to at least 95% of its 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.

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