The Affordable Care Act (ACA) requires large employers to offer affordable health insurance coverage to their full-time employees or face a penalty known as the “Pay or Play” tax. This tax is based on the employer’s average monthly wage (AMW) and the number of full-time employees. The affordability rate for employer-sponsored health coverage will increase from 8.39% to 9.02% of an employee’s household income for the 2025 calendar plan year.
What Does This Mean for Employers?
- Higher Penalties: Employers who fail to offer affordable coverage will face significantly higher penalties in 2025 compared to previous years.
- Increased Costs: The increased penalty may lead to higher costs for employers, which could potentially be passed on to employees in the form of higher premiums or reduced wages.
- Need for Compliance: Employers must carefully review their health insurance offerings to ensure they meet the ACA’s affordability requirements.
To Avoid Penalties, Employers Should:
- Offer Affordable Coverage: Ensure that the most affordable health insurance plan offered meets the ACA’s affordability standards.
- Track Employee Hours: Accurately track employee hours to determine who qualifies as a full-time employee.
- Communicate with Employees: Inform employees of their health insurance options and the consequences of not enrolling.
- Seek Professional Advice: Consult with us or an HR professional to ensure compliance with the ACA’s requirements.
One reply on “The Pay or Play Percentage Increase for 2025”
Helpful read! Ontario businesses might consider private business lenders for better loan terms when covering insurance.
https://grant-x.com/business-loans/private-lending