The IRS recently announced the 2015 and 2016 ACA shared responsibility penalties for applicable large employers (ALE’s) indexed for COLA, as per the original ACA bill passed by Congress.
As per the ACA, ALE’s that choose not to offer health insurance coverage to their employees are subject to penalty.
The penalty for not offering minimum essential coverage for 70% of employees in 2015, 95% in 2016, is $2,080 per employee for 2105 and $2,160 for 2016. This is up from the original $2,000. The penalty is determined by the number of Full Time Employee’s (FTE’S), minus 80 in 2015, and minus 30 in 2016, multiplied by the indexed amount.
A company will also be subject to a penalty when at least the applicable percentage of employees is offered the minimum essential coverage, but a full time employee receives a premium tax credit for individual health coverage because affordability or minimum value requirements have not been fulfilled. That penalty, originally $3,000, will now be adjusted to $3,120 in 2015 and $3,240 in 2016 and is determined by multiplying the penalty amount by the number of employees receiving the tax credit.
The IRS also noted that an employee’s health coverage would be considered unaffordable in 2016 if the employee’s required contribution exceeds 9.66% of the employee’s annual household income, up from 9.56% in 2015, which is again up from the original ACA 9.5%.