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Tax Penalties under ACA 

For Employers

1/1/2015 
Employers greater than 100
  • $2,000 per full-time employee less 80 employees. 
  • $3,000 per employee who is eligible for subsidies and elects coverage on the Exchange. 
  • These penalties are NOT TAX-DEDUCTIBLE

1/1/2016 
Employers greater than 50
  • $2,000 per full-time employee less 30 employees. 
  • $3,000 per employee who is eligible for subsidies and elects coverage on the Exchange. 
  • Thee penalties are NOT TAX-DEDUCTIBLE

For Employees

  • Began 1/1/2014 
  • Penalties Progress over a 3 year period 
  • 2014- Greater of 1% of modified adjusted household income or $95 per adult plus $47.50 per child. 
  • 2015 Greater of 2% of modified adjusted household income or $325 per adult plus $162.50 per child. 
  • 2016 Greater of 2.5% of modified adjusted household income or $695 per adult plus $347.50 per child. 

Solutions- to avoid ACA Tax Penalties

MEC Plans (Minimum Essential Insurance Coverage)

  • Covers 100% of the 63 CMS listed preventative services.
  • By only offering the MEC, Employers can prevent being taxed $2,000 per full-time employee.
  • Employers can charge employees any reasonable amount for the MEC- and can even offer a VOLUNTARY plan with employees paying the full premium cost.
  • Minimum Participation can be as low as 10 enrolled employees!
  • Employees can prevent paying the individual penalty tax by purchasing the MEC Coverage.

MVP Plans (Minimum Value Insurance Plans)

  • Meets the government 60% rule of allowed costs, and as long as employers do not charge employees more than 9.5% of employees W2 Box 1 income- the MVP Plan meets the governments criteria of being an "affordable MVP".
  • Optionally, the employer cannot charge any full-time employee more than 9.5% of that employees total modified adjusted household income, which would make this plan considered "affordable".
  • By offering an "affordable" MVP Plan, Employers can prevent being taxed both the $2,000 & $3,000 per full-time employee.
  • In most cases, lower-income employees waive coverage- even though they would only have to pay up to 9.5% of their income. So even though the employer is offering to sponsor the majority of the premium- they may not have to pay a lot when all is said and done.
  • Some of our insurance carriers offer MVP plans with NO MINIMUM PARTICIPATION.
  • The MVP plan incorporates the MEC benefits, other strategically selected medical benefits, a nationally acclaimed patented Chronic Disease Management (CDM) program, online explanation of benefits, online plan summaries and much more (May vary by insurance carrier).

Please contact us to discuss your situation, and how these solutions can work for you!


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