You probably know by now that the Affordable Care Act mandates that applicable employers must either offer health insurance coverage to their workers or else pay a penalty. So what happens if an employee refuses to accept it? Will you be fined if one of your employees doesn’t choose to sign up for the coverage you offer?

The short answer is no. As a general rule, employers will not suffer any punishment if an employee elects not to participate in the company-sponsored health insurance plan. Let us explain why.

  • Small businesses¬†aren’t yet required to offer or report on coverage. The Employer Shared Responsibility Payment isn’t emposed on those who employ less than 50 full-time workers. In short, small employers won’t face a penalty.
  • Large employers are penalized based on a two-step test. For those who employ more than 50 employees, they only face a penalty if they do not offer qualified, affordable coverage AND an employee buys subsidized coverage through the Marketplace.
  • In any case, the penalty is based on what the employer offers. Regardless of whether or not an employee accepts or declines coverage, his or her actions won’t affect the employer.

More and more employees are opting to forego their employer-sponsored health insurance plan in favor of purchasing coverage through the Marketplace. However, small or large, your business won’t face a penalty just because they decline to enroll.