The Patient Protection and Affordable Care Act (commonly known as the “Affordable Care Act”) was signed into law to expand the number of individuals with health insurance coverage in the United States. The Affordable Care Act is intended to increase the quality and affordability of health insurance, lower the uninsured rate by expanding public and private insurance coverage, and reduce the costs of healthcare. The law provides numerous mechanisms, including mandates, subsidies, and insurance exchanges, to increase coverage and affordability.
To ensure that employers continue to provide some degree of coverage, the law includes a “shared responsibility” provision, also known as the employer “play or pay” mandate. Effective January 1, 2015, certain employers with at least 50 “full-time equivalent” employees must pay a penalty if the employer does not offer affordable minimum coverage and one or more of their full-time employees obtain a premium tax credit through the newly established health insurance exchanges. For an individual to be eligible for a premium tax credit, his or her income must be below certain thresholds and the individual’s employer does not offer health coverage, or offers insurance that is unaffordable pursuant to standards set forth in the law.