One of the upcoming changes included in the healthcare reform bill is what is known as the Play or Pay penalty. It’s aimed at larger businesses with a certain amount of employees, and it is not exactly straightforward. An employer can offer health insurance , but, it must be “affordable”. The idea behind the penalty is to offset the cost of insurance for each employee that uses the public health care plans.
The specifics for the Play or Pay penalty are as follows:
- An employer that has 50 full-time or full-time equivalent employees (IE 100 part-time employees) must offer what is known as “affordable” coverage to all qualifying employees.
- When an employer does not offer health insurance to all employees, an annual tax of $2,000 for each full-time employee if one employee gets federally-subsidized coverage.
- In the case an employer does not offer “affordable” coverage to full-time employees, and one employee gets coverage through the exchange, the employer must pay an annual tax of $3,000 per subsidized employee who gets coverage through the exchange.
For all of these rules, the first 30 full-time employees are exempt from the penalties.
If you are in the Redlands area, or throughout California, contact Bernardini & Donovan Insurance Services for more information about how the penalties can affect your company.