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Beginning in 2015, the Patient Protection and Affordable Care Act (PPACA) imposes financial penalties on certain employers who don’t offer health insurance coverage and on some employers who do offer coverage. This sheet explains how the penalties are calculated.
Learn the essential facts about the penalty calculations in this NFIB Research Cribsheet.
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The table below shows employment data for nine hypothetical businesses.
#1: Unless the business has 50 or more full-time employees or FTEs, there are no penalties. ($0 with 49 employees, 1 of whom is subsidized)
#2: Unless the business has at least 1 subsidized employee, there are no penalties. ($0 with 50 employees, none of whom are subsidized)
#3 vs. #5: The mandate penalizes a non-providing firm $2,000 for creating an additional job. ($40K→$42K)
#3 vs. #4: The mandate DOES NOT penalize a non-providing firm for having more subsidized employees . ($40K in both cases)
#3 vs. #4: The mandate penalizes a providing firm with few subsidized employees $3,000 for each additional subsidized employee. ($3K→$6K)
#3 vs. #5: The mandate DOES NOT penalize a providing firm with few subsidized employees for creating an additional job – as long as the new employee is not subsidized. ($3K in both cases)
#6 vs. #7 vs. #8: A providing firm with many subsidized employees pays the same penalty as a non-providing firm of the same size.
#6 vs. #7: For a providing firm with many subsidized employees, the mandate penalizes the firm $2,000 for creating an additional job. ($42K→$44K)
#6 vs. #8: For a providing firm with many subsidized employees, the employer mandate DOES NOT penalize the firm for having more subsidized employees. ($42K in both cases)
#6 vs. #9: A firm can reduce its penalties tremendously by replacing full-time employees with part-timers. ($44K vs. $2K)
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