Pay or Play: Penalties for Failing to Offer Dependent Coverage

Beginning in 2015, the Affordable Care Act (ACA) generally requires applicable large employers to offer affordable, minimum value health coverage to their full-time employees (and dependents) or pay a penalty. These employer mandate penalties are also known as “shared responsibility” or “pay or play” penalties.

On May 13, 2014, the Internal Revenue Service (IRS) released FAQs addressing consequences under the employer shared responsibility rules for applicable large employers that offer health insurance coverage to all full-time employees, but do not offer dependent coverage.

In general, an employer will potentially be liable for an employer shared responsibility penalty only if a full-time employee:

  • Enrolls in coverage through an Exchange
  • Receives a subsidy to help pay for the Exchange coverage

Whether or not one or more of its full-time employees’ dependents enrolls through an Exchange and receives a subsidy does not affect an employer’s liability.

Read the full Health Care Reform Bulletin to learn more about:

  • Liability for Employer Shared Responsibility Penalties
  • Transition Relief for Offering Dependent Coverage in 2014