Under the ACA employer shared responsibility provision, an applicable large employer that does not offer affordable minimum-value coverage to full-time employees may face:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
The employer shared responsibility provision, often called the employer mandate, encourages applicable large employers to offer affordable, minimum-value health coverage to their full-time employees. An applicable large employer that fails to offer such coverage, and has a full-time employee who receives a premium tax credit through the exchange, may be assessed a penalty under the Internal Revenue Code. The penalty is intended to offset the cost of subsidizing employees whose employers did not provide qualifying coverage. This is a key ACA compliance concept tested in the group medical expense area.
Why the other options are wrong
- B) Self-funding is an employer financing option governed by ERISA rules; failing the employer mandate does not revoke the right to self-fund.
- C) The employer mandate is about offering qualified private coverage; it has nothing to do with converting a group plan to Medicare.
- D) The mandate imposes a monetary penalty for coverage failures; it does not restrict an employer from hiring employees.
Memory hook
Offer coverage or pay a penalty: the employer mandate puts a price on not insuring workers.