# Under the ACA, what is the consequence for not paying for insurance for your employees?

**URL:** <https://boards.straightdope.com/t/under-the-aca-what-is-the-consequence-for-not-paying-for-insurance-for-your-employees/684580>\
**Category:** Factual Questions\
**Created:** [March 26, 2014, 3:58am UTC](https://boards.straightdope.com/t/under-the-aca-what-is-the-consequence-for-not-paying-for-insurance-for-your-employees/684580 "2014-03-26T03:58:28Z")\
**Posts on this page:** 3\
**Page:** 2

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**Author:** ![buddy431](https://avatars.discourse-cdn.com/v4/letter/b/6a8cbe/32.png) [@buddy431](https://boards.straightdope.com/u/buddy431)\
**Post date:** [March 27, 2014, 4:41am UTC](https://boards.straightdope.com/t/under-the-aca-what-is-the-consequence-for-not-paying-for-insurance-for-your-employees/684580/21 "2014-03-27T04:41:17Z")

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I mean, wasn’t corporate-provided health insurance basically initially offered because there was a tax advantage over just increasing salary? That’s sort of what I thought. Now that I think about it, I’m not sure exactly how we got our current model.

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**Author:** ![Alley\_Dweller](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/alley_dweller/32/430_2.png) [@Alley\_Dweller](https://boards.straightdope.com/u/Alley_Dweller)\
**Post date:** [March 27, 2014, 4:49am UTC](https://boards.straightdope.com/t/under-the-aca-what-is-the-consequence-for-not-paying-for-insurance-for-your-employees/684580/22 "2014-03-27T04:49:08Z")

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> [@buddy431](#):
>
> I mean, wasn’t corporate-provided health insurance basically initially offered because there was a tax advantage over just increasing salary? That’s sort of what I thought. Now that I think about it, I’m not sure exactly how we got our current model.

Our convoluted system of employer-sponsored health care is a result of wage controls imposed during World War ii, believe it or not.

Employers were not allowed to raise wages. So they found a way around that restriction by enhancing fringe benefits instead. Health insurance was a very popular benefit.

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**Author:** ![Iggy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/iggy/32/3364_2.png) [@Iggy](https://boards.straightdope.com/u/Iggy)\
**Post date:** [March 27, 2014, 5:50am UTC](https://boards.straightdope.com/t/under-the-aca-what-is-the-consequence-for-not-paying-for-insurance-for-your-employees/684580/23 "2014-03-27T05:50:51Z")

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> [@Frylock](#):
>
> …  
> (Also, btw, the fine is just $2000 per year? Compared to the cost of insurance coverage isn’t that chump change? Why don’t companies just take that option?)

And yes, $2,000 per employee per year for failing to provide coverage at all.

It is $100 per employee per day for providing non-compliant coverage.  
So if you have 100 employees and provide…  
no coverage at all. Pay $2000 per employee [in excess of 30 employees](http://www.law360.com/articles/410629/5-ppaca-play-or-pay-compliance-techniques-to-consider) = $140,000  
inadequate coverage, pay $100 x 365 days x 100 employees = $3,650,000 tax.

The $100 per day per employee penalty applies to a variety of other issues under the PPACA such as [providing a better plan for some employees](http://www.nelsonmullins.com/newsletters/health-plan-discrimination-ppaca-takes-it-to-a-new-level) or [not extending dependent coverage to age 26](http://employeebenefits.foxrothschild.com/2013/08/articles/welfare-plans/100-a-day-penalties-ppaca-non-compliance-can-be-expensive/).

So whatever you do, do it all the way.

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