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Affordable Care Act Limits And Penalties For 2017

The Affordable Care Act (ACA) contains a number of limits and penalties that apply to employers. These include the following provisions:

  • Employer Shared Responsibility (employer mandate) – requirement that applicable large employers (ALEs) offer affordable, minimum value coverage to substantially all full-time employees and their dependents
    • Affordability – an offer is affordable if the employee’s contribution, toward the employee only rate, does not exceed a certain percent of their compensation. Employers use one of the three allowable safe harbor compensation methods to determine affordability, e.g. W-2, rate of pay, or federal poverty line (FPL).
    • Penalties for failure to comply with the Employer Shared Responsibility provision
      • Tier 1 - Failure to offer to substantially all full-time employees
      • Tier 2 – Failure to provide coverage that is affordable or meets minimum value (plan reimburses at least 60% of the cost of essential health benefits)
    • Market Rules
      • Flexible Spending Accounts – the maximum amount of annual pretax dollars employees may put aside through payroll deduction to pay for qualified medical expenses
      • Health Spending Account (HSA) – an employee-owned bank account coupled with a qualified high deductible plan

Listed below are the new limits and penalties for 2017 along with historical perspective.

Calendar year 2014 2015 2016 2017
Tier one –

Failure to offer coverage or to offer to 95% of employees (70% for 2015)

 $2,000 $2,080 $2,160 $2,260*
Tier two –

Failure to offer coverage that is affordable and meets minimum value

$3,000 $3,120 $3,240 $3,290*
Flexible Spending Account (FSA) $2,500 $2,550 $2,550 $2,600
Health Spending Accounts (HSA) – maximum contribution Self-only: $3,330


Family: $6,550

Self-only: $3,350


Family: $6,650

Self-only: $3,350


Family: $6,750

Self-only: $3,400


Family: $6,750

* Projected amounts

Plan years 2014 2015 2016 2017
Affordability Safe Harbor Percentages 9.5% 9.56% 9.66% 9.69%


ACA limitsClick here for a printable version of this article.