The Affordable Care Act’s employer shared responsibility provision requires applicable large employers (ALEs) to either offer minimum essential coverage to full-time employees and their dependents or make an employer shared responsibility payment to the IRS. The employer shared responsibility provision is sometimes referred to as the “employer mandate” or the “pay or play rule.”
An ALE may owe an employer shared responsibility payment for one of two reasons. The first being if the employer does not offer health coverage to at least 95% of their full-time employees and their dependents. The second reason is if the employer does offer coverage, but the coverage does not provide minimum value or is unaffordable to an employee. An ALE may also owe payment if a full-time employee not offered coverage receives a premium tax credit.
For more details on employer-shared responsibility, go here.