Pay or Play: Understanding the ACA Employer Mandate
The Affordable Care Act employer mandate gives Georgia business owners two clear options for employee coverage – pay or play. Both provision options can impact your business in different ways, and it’s important for you to have total clarity about each before you can determine which strategy is the best fit for your business.
The employer mandate applies to all applicable larger employers (ALEs) with 50 or more full-time or full-time equivalent employees. Simply put, the ACA mandates that ALEs offer affordable health insurance that provides minimum value or pay the penalty for not providing coverage.
Let’s break down how the mandate can affect your business, whether you choose to pay or play:
Pay – The Employer Mandate Penalties
When you don’t follow the ACA employer mandate requirements, certain penalties that apply:
- If you provide no coverage whatsoever, you will be required to pay a penalty of $2,160 per full-time employee (minus first 30).
- If the plan doesn’t provide “affordable” coverage OR the plan fails to meet “minimum value,” the penalty is $3,240 per full-time employee receiving a subsidy or $2,160 per full-time employee (minus first 30).
Play – Determine Coverage Affordability and Plan Value
Providing coverage isn’t enough to ensure compliance, you also have to be sure your premium is “affordable” and provides “minimum value.” Here are a few ways you can determine that your plan coverage meets the requirements:
- Coverage is considered “affordable” if employee contributions for employee-only coverage don’t exceed a specific percentage of their income (in 2017, that percentage will be 69 percent).
- A “minimum value” plan pays at least 60 percent of the cost of covered services, considering deductibles, copays, and coinsurance. You can use the Department of Health & Human Services’ minimum value calculator to determine if your plan provides minimum value.
What’s Right for Your Business?
Now that you know how each provision can affect your business, you might be wondering if it’s easier to pay the penalty rather than provide coverage. Or maybe you think it would be best to offer an affordable plan to your employees and avoid the penalty altogether.
The truth is, the employer mandate approach is different for every business. Let Shop Benefits help you determine how much each strategy will cost your business and develop a custom plan that fits your business needs.
Contact us for your complimentary review or call (404) 256-2171 and ask for Al Schiebel to see what option is best for your business. Get your affordable quote today!