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.

* Projected amounts

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