What is the consequence for large employers who do not offer sufficient health coverage under the ACA?

Large employers who do not offer sufficient health coverage under the Affordable Care Act (ACA) incur a tax penalty. This provision is designed to ensure that employees have access to affordable health insurance. If an employer does not meet the ACA’s coverage requirements—such as offering plans that are considered affordable and provide minimum essential coverage—they may be subject to an Employer Shared Responsibility Payment. This tax penalty is assessed on employers with 50 or more full-time equivalent employees if at least one of their employees receives a premium tax credit for purchasing health insurance through the Health Insurance Marketplace.

This mechanism encourages large employers to provide quality health insurance options to their workforce, contributing to the overarching goals of expanding coverage and reducing the number of uninsured individuals. Providing a strong incentive for compliance, the penalty structure serves as a regulatory tool to promote the provision of health care benefits that meet federal standards. In this context, the correct answer emphasizes the financial consequence that large employers face should they fail to adhere to the ACA’s health coverage mandates.