• (888) 505-7724
  • updates@sbmamec.com
  • Employer Portal
  • Employee Portal
SBMA Benefits
  • Facebook
  • Instagram
  • LinkedIn
  • Mail
  • Services
  • Benefit Plans
  • Employees
  • Employers
  • Resources
    • Compliance Updates
    • No Surprises Act Resource Page
    • COVID-19 Vaccine & Testing Updates
    • SmithRx Formulary
    • COBRA
    • At-Home COVID-19 Tests
  • News & Insights
  • Contact SBMA
  • Search
  • Menu Menu

ACA Penalty A and B Breakdown

July 21, 2020/in ACA Compliance

All applicable large employers (ALEs) must comply with the Affordable Care Act (ACA), which requires employers to offer minimum essential coverage to all employees.

If an employer does not comply with this employee coverage requirement, it could lead to penalties for the employer and potentially an IRS audit.

Below is a breakdown of ACA penalties A and B and how they could affect your company.

Who is Considered a Large Employer?

First, who is considered a large employer?

Any company or organization with an average of at least 50 full-time employees or “full-time equivalents (FTEs) is considered an applicable large employer.

*For the purposes of the ACA, a full-time employee is someone who works a minimum of 30 hours a week.

What Are ACA Benefits?

The ACA was created in 2010 to offer more affordable health benefits to a wider range of people. Any ACA-compliant benefit plan must cover these 10 health benefits:

  • “Ambulatory services
  • Emergency services
  • Hospitalization
  • Pregnancy, maternity, and newborn care (before and after birth)
  • Mental health and substance use disorder services
  • Prescription drugs
  • Rehabilitative and habilitative services and devices
  • Laboratory services 
  • Preventative and wellness services and chronic disease management 
  • Pediatric services”

Additionally, ACA benefits cover birth control and breastfeeding support. 

The Employer Mandate (Penalty A)

Employers must offer at least Minimum Essential Coverage (MEC) to any benefit-eligible employee. Non-compliance will generally result in a penalty of $2,750 annually PER eligible employee.

The Employer Mandate (Penalty B)

Employers must offer a minimum value plan that meets 60% actuarial value, including hospitalization services.

The MV plan must be offered at a maximum contribution of 9.86% of the employee’s income – YOU pay the difference.

For example, take a California minimum wage employee: A $10.00/hour employee working a minimum of 30 hours per week has a maximum employee contribution of $128.18 per month.

If the plan cost is $300, YOU pay the difference of $171.82 per month. 

Non-compliance will generally result in an annual $4,120.00 penalty PER employee who enrolls in coverage through the state exchange AND receives a premium subsidy.

The Individual Mandate

The individual mandate went away starting January 1st, 2019, for most Americans.

Those individuals in specific states that maintain the individual mandate, including the District of Columbia, Massachusetts, or New Jersey, will continue to be penalized according to the individual mandate.

These penalties can easily add up with over 100 employees eligible for health coverage. At SBMA, we want to help you avoid any potential penalties for lack of proper insurance.

Infographic of "ACA Penalty A and B Breakdown"

Contact an SBMA representative for more information regarding your employer benefit needs.

Tags: ACA Compliance, aca penalties, ACA Reporting, aca standards, ale, large business, Penalty A, Penalty B, The Individual Mandate:
Share this entry
  • Share on Facebook
  • Share on Twitter
  • Share on LinkedIn
  • Share by Mail
https://www.sbmabenefits.com/wp-content/uploads/2020/07/ACA-Penalty-A-and-B-Breakdown.png 628 1200 Amanda Rogers https://www.sbmabenefits.com/wp-content/uploads/2021/12/SBMA_Website-Logo_250x150.png Amanda Rogers2020-07-21 13:35:502022-08-28 22:12:17ACA Penalty A and B Breakdown
You might also like
ACA Compliance and Workplace Changes ACA Compliance and Workplace Changes
Understanding Minimum Essential Coverage Options Understanding Minimum Essential Coverage Options
Penalty A and Penalty B Compliance Penalty A and Penalty B Compliance
How to Eat Healthy on a Budget How to Eat Healthy on a Budget
What You Need to Know about 2020 1094/1095 Filing What You Need to Know about 2020 1094/1095 Filing
ACA Penalties May Affect Your Business ACA Penalties May Affect Your Business
Why is offering MEC benefits more affordable than not? Why is Offering MEC Benefits More Affordable Than Not?
This new law addresses surprise medical billing and requires new disclosure The No Surprises Act: Everything You Need to Know

Search

Categories

LATEST NEWS IN ACA COMPLIANCE

  • Full-Time vs Part-Time Benefits:Full-Time vs Part-Time Benefits: Why It MattersJanuary 1, 2023 - 7:00 am
  • Affordable care act ACA or Obamacare and stethoscope.Received an ACA Penalty from the IRS? Here’s What to DoDecember 25, 2022 - 12:25 pm
  • affordable care act requirementsACA is Here to StayNovember 20, 2022 - 8:00 am

Archive

CONNECT WITH US

USEFUL LINKS

EMPLOYER PORTAL
EMPLOYEE PORTAL
PRIVACY POLICY 
THE BLOG

CONTACT SBMA

888-505-7724
UPDATES@SBMAMEC.COM

HOURS

Mon – Fri: 7:00am—5:00pm (PST)
Sat: CLOSED
Sun: CLOSED

FOLLOW US

© SBMA 2022 – all rights reserved

site designed by digitalstoryteller.io

© SBMA 2021 – all rights reserved
site designed by digitalstoryteller.io

Health Insurance Options for Coronavirus Job LossHealth Insurance Option for Coronavirus Job LossWhat Does Minimum Essential Coverage Entail?What Does Minimum Essential Coverage Entail? Scroll to top

This site uses cookies. By continuing to browse the site, you are agreeing to our use of cookies.

Accept settings

Cookie and Privacy Settings



How we use cookies

We may request cookies to be set on your device. We use cookies to let us know when you visit our websites, how you interact with us, to enrich your user experience, and to customize your relationship with our website.

Click on the different category headings to find out more. You can also change some of your preferences. Note that blocking some types of cookies may impact your experience on our websites and the services we are able to offer.

Essential Website Cookies

These cookies are strictly necessary to provide you with services available through our website and to use some of its features.

Because these cookies are strictly necessary to deliver the website, refusing them will have impact how our site functions. You always can block or delete cookies by changing your browser settings and force blocking all cookies on this website. But this will always prompt you to accept/refuse cookies when revisiting our site.

We fully respect if you want to refuse cookies but to avoid asking you again and again kindly allow us to store a cookie for that. You are free to opt out any time or opt in for other cookies to get a better experience. If you refuse cookies we will remove all set cookies in our domain.

We provide you with a list of stored cookies on your computer in our domain so you can check what we stored. Due to security reasons we are not able to show or modify cookies from other domains. You can check these in your browser security settings.

Google Analytics Cookies

These cookies collect information that is used either in aggregate form to help us understand how our website is being used or how effective our marketing campaigns are, or to help us customize our website and application for you in order to enhance your experience.

If you do not want that we track your visit to our site you can disable tracking in your browser here:

Other external services

We also use different external services like Google Webfonts, Google Maps, and external Video providers. Since these providers may collect personal data like your IP address we allow you to block them here. Please be aware that this might heavily reduce the functionality and appearance of our site. Changes will take effect once you reload the page.

Google Webfont Settings:

Google Map Settings:

Google reCaptcha Settings:

Vimeo and Youtube video embeds:

Other cookies

The following cookies are also needed - You can choose if you want to allow them:

Privacy Policy

You can read about our cookies and privacy settings in detail on our Privacy Policy Page.

Accept settings