Beginning in 2014, employers with 50+ full-time employees or full-time equivalents must offer medical coverage that is "affordable" and provides minimum value to full-time employees and their children up to age 26 or face penalties.
Coverage is “affordable” if employee contributions are less than 9.5% of:
- Employee's W-2 wages
- Employee’s monthly wages (hourly rate x 130 hours per month),
- Federal Poverty Level for a single individual
A plan must pay 60% of the cost of covered health services to provide "minimum value." The minimum value calculator* is available online.
There is transitional relief for employer-sponsored plans with plan years that currently begin on a date other than January 1. They will not face penalties if they comply by the first day of their 2014 plan year. Employers cannot change their plan year now to take advantage of this transitional relief.
This chart summarizes the coverage requirements and the 2014 penalties that apply if any full-time employee purchases coverage on an exchange and receives a federal premium assistance tax credit. The penalties will be adjusted in 2015 and future years.