Play or pay: Employer Responsibility under the Affordable Care Act
Business Tax Penalty Guide
Your result: You have to pay a tax penalty starting January 1, 2015.
So, your company employs more than 50 full time workers, you offer insurance to your employees, but the cost exceeds the maximum threshold of expense to your employees.
Because of this, your employees can seek to purchase health coverage through their state health insurance marketplace or exchange and they would be able to receive a tax credit if their income falls within the federal poverty guidelines (below 400% of federal poverty level).
The penalty you will incur is calculated by either determining the cost per employee that is receiving a tax credit, or up to a maximum fine based on the number of employees in your company.
If you have employees who are receiving a tax credit, you take that number times $3,000 per employee. For example, if you have 2 employees receiving a tax credit times $3,000, your total fine for the year would be $6,000 ($3,000 x 2 employees).
Either that or the fine is based on the total number of employees in your company who do not have what is considered to be minimum essential heath coverage. To figure out this amount, you would take $2,000 fine per year, per employee. However, the IRS does allow you to reduce this amount by your first 30 employees. So if you have 51 employees, your fine would be calculated by taking 51 employees, minus the first 30 = 21 employees times the fine of $2,000 per employee. In this case your fine would be $42,000 for the year.
This penalty is the greater of the 2 amounts calculated above (either the $3,000 per employee receiving a tax credit or $2,000 per employee).
Because of this, your employees can seek to purchase health coverage through their state health insurance marketplace or exchange and they would be able to receive a tax credit if their income falls within the federal poverty guidelines (below 400% of federal poverty level).
The penalty you will incur is calculated by either determining the cost per employee that is receiving a tax credit, or up to a maximum fine based on the number of employees in your company.
If you have employees who are receiving a tax credit, you take that number times $3,000 per employee. For example, if you have 2 employees receiving a tax credit times $3,000, your total fine for the year would be $6,000 ($3,000 x 2 employees).
Either that or the fine is based on the total number of employees in your company who do not have what is considered to be minimum essential heath coverage. To figure out this amount, you would take $2,000 fine per year, per employee. However, the IRS does allow you to reduce this amount by your first 30 employees. So if you have 51 employees, your fine would be calculated by taking 51 employees, minus the first 30 = 21 employees times the fine of $2,000 per employee. In this case your fine would be $42,000 for the year.
This penalty is the greater of the 2 amounts calculated above (either the $3,000 per employee receiving a tax credit or $2,000 per employee).
