What Does the Elimination of the Individual Mandate Penalty Mean for Employers?

Last Updated on November 1, 2018

Currently, the Affordable Care Act (ACA) requires individuals to be covered under a health plan that provides at least Minimum Essential Coverage (MEC). This is commonly referred to as the Individual Mandate. If an individual fails to maintain coverage that meets the MEC requirement, they are subject to a penalty.

Under the new proposed tax reform bill (Tax Cuts and Jobs Act (TCJA)), the penalty for an employee not maintaining MEC insurance as required under the Individual Mandate is reduced to zero dollars. Therefore, effectively eliminating the Individual Mandate. The elimination of the penalty will be effective for months beginning after December 31, 2018. 

How Does This Affect the Employer Mandate?

A common question we have received is how does the potential elimination of the Individual Mandate penalty affect a Applicable Large Employer’s requirement to perform ACA reporting, offer insurance, etc. as required by the Employer Mandate.The elimination of the Individual Mandate penalty does not change an employer’s requirements under the Employer Mandate. The TCJA merely reduces the Individual Mandate penalty. It does not change any requirements relating to the Employer Mandate.

Regardless of whether the TCJA becomes law, it is important that Applicable Large Employers continue to follow the Employer Mandate to avoid potentially significant penalties.

Chris Cooley is co-founder of MyHRConcierge and SMB Benefits Advisors. Clients rely on him for employee handbooks, anonymous worker tip lines, manager HR help lines, HR compliance and administration, workforce management and benefits advisory solutions. Cooley’s companies specialize in helping small to mid-sized grocers throughout the U.S. Chris can be reached at (855) 538-6947, ext. 108 or at ccooley@myhrconcierge.com.