Complying With the ACA’s Pay-or-Play Rules for 2025
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 fulltime 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 compliance checklist outlines key steps for employers to comply with the ACA’s pay-or-play rules for 2025. Use this checklist as a guide when reviewing your company’s compliance with the ACA’s pay-or-play rules for 2025. For assistance, contact Parrott Benefit Group.
This checklist is merely a guideline. It is neither meant to be exhaustive nor meant to be construed as legal advice. It does not address all potential compliance issues with federal, state or local standards. Consult your licensed representative at Parrott Benefit Group or legal counsel to address possible compliance requirements. © 2024 Zywave, Inc. All rights reserved.
Complying With ACA Reporting Requirements for 2025
The Affordable Care Act (ACA) created reporting requirements under Internal Revenue Code (Code) Sections 6055 and 6056.
- Under Section 6055, self-insuring employers and other parties that provide minimum essential health coverage must report information on this coverage to the IRS and covered individuals.
- Under Section 6056, applicable large employers (generally, those with 50 or more full-time employees) are required to report information to the IRS and their full-time employees about their compliance with the employer shared responsibility (pay or play) rules and the health coverage they have (or have not) offered.
This compliance checklist outlines key steps for employers to comply with the ACA’s reporting requirements. Keep in mind that a growing number of states have enacted their own health coverage reporting requirements. Employers need to comply with the federal ACA reporting requirements and any applicable state reporting requirements. Use this checklist as a guide when reviewing your company’s compliance with the ACA’s reporting requirements for 2025. For assistance, contact Parrott Benefit Group.
This checklist is merely a guideline. It is neither meant to be exhaustive nor meant to be construed as legal advice. It does not address all potential compliance issues with federal, state or local standards. Consult your licensed representative at Parrott Benefit Group or legal counsel to address possible compliance requirements. © 2023-2024 Zywave, Inc. All rights reserved.
