Employer Requirements

Certain small employers (employing less than 50 full-time employees) are exempt from the $2,000 per full-time employee penalty set to begin in 2014. Otherwise, the penalties may vary depending upon whether coverage is provided by the employer, and if the coverage is deemed "affordable." Under the law as written, coverage is defined as unaffordable if the employee's cost for self-only coverage exceeds 9.5 percent of the employee's household income. On Sept. 13, 2011, the Internal Revenue Service proposed a safe harbor under which an employer would not be subject to the penalty as long as the employer offered its full-time employees (and their dependents) minimum essential coverage and the employee portion of the self-only premium for the employer's lowest-cost coverage did not exceed 9.5 percent of the employee's W-2 wages, as opposed to the employee's household income. In such case, even if the employee did qualify for premium assistance through the Exchange, the employer would not be penalized.

An employer may also be required to pay a penalty if an employee qualifies for premium assistance and purchases coverage through an Exchange. If an employee qualifies for assistance, and purchases coverage through an Exchange, the penalty will equal the lesser of $3,000 per full-time employee who receives premium assistance to purchase coverage with the first 30 employees being exempted in each case.

Yes. However, grandfathered plans are considered minimum essential coverage under the employer mandate.