Under the Affordable Care Act (ACA), Applicable Large Employers (ALEs) are vulnerable to one of two potential employer shared responsibility penalty assessments. The “Subsection (a) Penalty” applies where the ALE fails to offer minimum essential coverage to at least 95% of its full-time employees (and their dependents) and at least one full-time employee qualifies for a premium subsidy.
Alternatively, the “Subsection (b) Penalty” applies where the employer meets the 95% offer threshold but fails to offer minimum value, affordable coverage to a full-time employee and that employee then qualifies for a premium subsidy. Ensuring an offer of coverage is affordable, then, is critical to avoiding the Subsection (b) Penalty.
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