What happens if a large business doesn't offer health insurance?

December 21, 2013

Under the Health Reform law, a "Large Business" is one with 50 or more full-time equivalent (FTE) employees. You are subject to penalties starting in 2015.



What are we penalized for?


Starting in 2015, a Large Business is subject to penalties for not offering health insurance or for offering health insurance that is not affordable for all employees. 



Penalty for not offering coverage 


The penalty for not offering health insurance is $2,000 per employee per year. You get a waiver for the first 30 employees.  


So, for example, let's say that your business employs 72 full-time equivalents.... You get a waiver on the first 30, so that leaves 42 employees to pay penalty for.... 42 x $2,000 = $84,000 annual penalty.



What if my plan is not affordable?


A Large Business plan has to pass an Affordability Test for each and every employee.


What the employee pays toward the employee-only premium (for single coverage, do not count what he might pay toward spouse/partner or children's coverage) cannot exceed 9.5% of his/her Modified Adjusted Gross Income.


If your plan is unaffordable, and at least one employee tries to use a tax subsidy to get lower costs on Obamacare Individual or Family Insurance plans, then the penalty is $3,000 per employee per year.


For example, if there was a business with 72 employees: 72 employees x $3,000 = $216,000 annual penalty



Is it better to "pay or play"?


Good question. Many businesses are wondering if it's better to pay (pay penalties and not offer coverage) or play (offering affordable coverage to employees).  


That answer may be different for differnet businesses. Let your AHIPE expert show you, down to the penny, how much each strategy will cost your business. We'll advise you on what might be the best thing for your business and develop a customized financial plan.

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