Pay or Play Penalties

There are two potential pay or play penalties, based on whether the applicable large employer (ALE) offers health coverage to certain employees:

1. ALEs Not Offering Coverage: The ALE does not offer health coverage or offers coverage to fewer than 95% of its full-time employees (and their dependents), and at least one full-time employee receives a premium tax credit; or
2. ALEs Offering Coverage That Is Not Affordable Or Does Not Provide Minimum Value: The ALE offers health coverage to at least 95% of its full-time employees (and their dependents), but at least one full-time employee receives a premium tax credit, which may occur because the ALE did not offer coverage to that employee or because the coverage the ALE offered that employee was either unaffordable to the employee or did not provide minimum value.

How to Calculate the Penalty