Section 4980H ‘Pay or Play’ Employer Mandate for 2024
The Employer Mandate has been in effect since January 1, 2015, and since 2016, it applies to all employers with 50 or more full time and full time equivalent employees. The 50 employee threshold includes all employees of commonly owned entities.
Requirements under Section 4980H
Employer must offer minimum essential coverage to 95% of all full time employees that has a minimum actuarial value of 60%
AND
Coverage must be affordable; safe harbor indicates coverage is affordable if the employee share of premium for single coverage is 8.39% (2024) or less of employee’s W-2 Box 1 wages, or rate of pay
Grounds for employer penalty
The ‘A’ Penalty 2023: If Employer does not offer coverage to 95% of its full time employees, and one employee receives a subsidy to purchase insurance on the Health Exchange, the Employer is subject to a penalty equal to $2,880 x every full time employee (minus 30)
The ‘A’ Penalty 2024: If Employer does not offer coverage to 95% of its full time employees, and one employee receives a subsidy to purchase insurance on the Health Exchange, the Employer is subject to a penalty equal to $2,970 x every full time employee (minus 30)
OR
The ‘B’ Penalty 2023: If employer offers coverage that is unaffordable (exceeds 9.12% in 2023 of income using a safe harbor method) or doesn’t offer minimum value, and any employees qualify for a subsidy to purchase insurance on the Health Exchange, the employer is subject to a penalty equal to $4,320 x the number of full time employees that receive a subsidy to purchase insurance on the Health Exchange
The ‘B’ Penalty 2024: If employer offers coverage that is unaffordable (exceeds 8.39% in 2024 of income using a safe harbor method) or doesn’t offer minimum value, and any employees qualify for a subsidy to purchase insurance on the Health Exchange, the employer is subject to a penalty equal to $4,460 x the number of full time employees that receive a subsidy to purchase insurance on the Health Exchange.