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Employer Shared Responsibility

Tax payments for non-compliant employers

The Affordable Care Act requires some businesses with at least 50 full-time employees (or full-time equivalents) to offer health plans that meet certain minimum standards to those employees and their dependents. If applicable large employers (ALE) fail to offer such coverage, they may have to pay a tax called the employer shared responsibility payment (ESRP).

The IRS and U.S. Treasury Department have issued final regulations on the Employer Shared Responsibility provisions under section 4980H of the Internal Revenue Code.

How is my business affected?

The employer shared responsibility policy affects employers as follows:

  • Fewer than 50 full-time employees: These small businesses are not subject to ESRPs.
  • Business with 50 or more full-time employees: These businesses must insure their employees. If they don’t yet provide health insurance meeting quality and affordability standards to their full-time employees, they may face an ESRP of $2,000 per employee not covered (excluding the first 30 employees). Additionally, if at least one full-time employee receives a premium tax credit after purchasing coverage through the Federal Health Insurance Marketplace, the employer will be subject to an ESRP of $3,000 for each employee who received coverage through the Marketplace.

Find out whether you’re an (ALE).

The IRS Q & A page can help determine whether your business is subject to the employer shared responsibility regulations, and what reporting measures you may need to take.