Legal Alerts

Health Care Reform: Employer Play or Pay Penalties


UPDATED 7/3/2013

Beginning in 2015, employers may be subject to "play or pay" penalties under the Patient Protection and Affordable Care Act. Play or pay penalties refer to assessments to employers who fail to offer employees minimum essential health coverage that is both "affordable" and provides "minimum value" (for 2014, compliance is voluntary and no penalties will apply for noncompliance). Employers should estimate their potential liability for the penalties, consider the financial implications of offering or not offering health coverage, and execute strategies to reduce or eliminate their play or pay penalties. Employers may also need to amend their health plan documents and summary plan descriptions to reflect any changes made to the plan's eligibility rules and coverage options. 

The following chart provides the basic analysis used to determine an employer's potential play or pay penalty. Additional rules, safe harbors, exceptions and transition periods may also apply in specific circumstances.   

Click on the chart to download as a PDF.

For further information about how the Patient Protection and Affordable Care Act affects your health plans, contact any of the following:

Joshua T. Natzel (Author)
Associate, Employee Benefits and Executive Compensation 

Edward J. Wegerson 
Partner, Employee Benefits and Executive Compensation

Anthony A. Lusvardi
Partner, Employee Benefits and Executive Compensation 

The information provided above is intended for general informational purposes only. It should not be construed as legal advice or legal opinion on any specific facts or circumstances and you are urged to consult a Lindquist & Vennum LLP attorney or one of your own choosing concerning your situation and specific legal questions you have.  

IRS Circular 230 Notice: To ensure compliance with requirements imposed by the IRS, we inform you that, except to the extent expressly provided to the contrary, any federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.   

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