Complying with the ACA Pay or Penalty Rules for 2024 | Checklist

The Affordable Care Act (ACA) requires applicable large employers (ALEs) to offer affordable, minimum-value health coverage to their full-time employees (and dependents) or potentially pay a penalty to the IRS. This employer mandate is also known as the “pay or play” rules. Small employers who are not ALEs are not subject to the ACA’s pay or play rules.

An ALE may be subject to a pay or play penalty if at least one full-time employee receives a premium tax credit for purchasing individual health coverage through an Exchange and the ALE:

• Did not offer health plan coverage to at least 95% of full-time employees and their dependents;
• Offered health plan coverage to at least 95% of full-time employees but not to the specific full-time employee receiving the credit; or
• Offered health plan coverage to full-time employees that was unaffordable or did not provide minimum value.

Depending on the circumstances, one of two penalties may apply under the pay or play rules: the 4980H(a) penalty or the 4980H(b) penalty.

This checklist outlines key steps for employers to comply with the ACA’s pay or play rules for 2024.