ACA Employer Shared Responsibility

Definition

IRC §4980H sets the employer shared responsibility payment ("employer mandate penalty"). Two penalty triggers: §4980H(a) for not offering coverage to substantially all FTEs, and §4980H(b) for offering unaffordable or insufficient-value coverage. Penalties are assessed monthly per FTE.

1094/1095-C reporting documents the offer of coverage to each FTE and is used by the IRS to assess penalties. PEOs handle this reporting automatically.

Common questions about ACA Employer Shared Responsibility

Related terms

• Affordable Care Act (ACA) — The 2010 federal health reform law that established the employer mandate, exchanges, and various coverage requirements.
• Employer mandate — The ACA requirement that applicable large employers offer affordable health coverage to full-time employees or pay penalties.
• Group health insurance — Health insurance purchased by an employer to cover its employees, typically at lower per-employee cost than individual policies.

Browse the full PEO glossary

This is one entry from our PEO glossary covering payroll, benefits, workers comp, HR compliance, and PEO mechanics. Browse all terms.