Employer Penalties

Explanation

The health care reform law does not specifically require employers to offer health coverage to their employees. However, beginning in 2014, regardless of whether or not an employer offers coverage to its full-time employees, a large employer (at least 50 full-time employees in the previous calendar year) may be potentially liable for a penalty if at least one of its full-time employees obtains subsidized coverage through an Exchange.

These rules are set forth in Section 1513 of the Affordable Care Act (ACA), as amended by Section 1003 of the Health Care and Education Reconciliation Act of 2010. A report (dated April 5, 2010) issued by Congressional Research Service provides a summary of these employer penalties, as well as illustrative examples that you may find useful. This report can be found at www.ncsl.org/documents/health/EmployerPenalties.pdf  (1.24 MB).

Questions and answers

• What is a large employer for purposes of these penalties? 
• Who is counted as a full-time employee and a full-time equivalent employee? 
• Do these penalties apply to part-time employees? 

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