Potential Healthcare Penalties for Employers

Connecticut employers may face new penalties and fees under the Affordable Care Act. The Kaiser Family Foundation has published a summary of those charges (healthreform.kff.org).

Note: The condensed summary below is just a summary of very complex laws and regulations; other exceptions and conditions may apply. Many questions are still unanswered, including the definitions of certain general terms used in this summary. Federal regulation and guidance will have to clarify and direct implementation of the ACA. 

• Note: Employers with fewer than 25 employees with an average wage of $50,000 or less may be eligible for a health insurance tax credit.

• Employers that do NOT provide coverage, and at least one employee receives a premium tax credit or cost-sharing subsidy in the state exchange, will be subject to penalties of $2,000 annually times the number of full-time employees, minus 30 employees.
• Employers that DO provide coverage must at a minimum meet the following requirements to avoid penalties: (1) The insurance must pay for at least 60% of the covered health care expenses of a typical population; (2) Employees must not pay more than 9.5% of “family income” for coverage.
• Penalties for noncompliance: If you provide insurance and do not comply with the above requirements, then you may be subject to penalties of $3,000 annually times the number of full-time employees receiving a tax credit, minus 30 employees (subject to a maximum calculation).
• State Exchange:  In addition to penalties, certain employees may purchase insurance through the state exchange and receive a premium tax credit.
• Future Increases: Penalties are increased each year by the growth in insurance premiums.