Premium Surcharges

Affordable Care Act

A large employer must offer health coverage that is affordable or pay a penalty. Affordability is based on the employee’s required contribution for self-only coverage and ​premium surcharges can make coverage unaffordable. When calculating affordability, surcharges are added to the employee-required contribution for all employees, even those who are vaccinated and therefore not subject to the surcharge.

Surcharges and Affordability

The following are two examples of the impact on employers and employees if surcharges are implemented.

 

Without Surcharge

An employer offers minimum essential coverage that provides minimum value to all full-time employees:​

  • The employee required contribution is $94 per month, which satisfies the Federal poverty level safe harbor.​

  • The employer is not subject to ACA affordability penalties. 

With Surcharge​

An employer offers minimum essential coverage that provides minimum value to all full-time employees with a surcharge:

  • The employee required contribution is $94 per month, which satisfies the Federal poverty level safe harbor. ​

  • The employer adds a vaccine surcharge of $200 per month, which increases the employee-required contribution to $294 for all employees. Coverage is no longer affordable under the Federal poverty level safe harbor.​

  • The employer is subject to a potential penalty of $338 per month for each employee who qualifies for a premium tax credit through the Health Insurance Marketplace.

Premium Surcharge - Resources

  • Joint Agency FAQS: HIPAA and COVID-19

    Click here

  • FAQs clarify COVID-19 vaccine coverage requirements & incentives

    Click here

  • What You Should Know About COVID-19 and the ADA, the Rehabilitation Act, and Other EEO Laws

    Click here

  • How to Handle an Employee's Request for a Medical or Religious Accommodation to a Vaccine Requirement

    Click here
More Resources