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The Affordable Care Act's employer "shared responsibility" penalties don't apply to an employer's first 30 full-time employees, and neither penalty applies to an employer until at least one employee actually enrolls in health insurance through the Health Insurance Marketplace (remember, we're not calling them Exchanges anymore) and receives an income tax credit or a cost-sharing reduction based on the employee's household income.

 

If an employer doesn't have more than 30 full-time employees, the employer won't be subject to the penalties.  So some employers are considering reducing the work schedules of some of their employees to keep their full-time employee count below 31.

 

Similarly, if none of an employer's employees receive any of these credits or reductions, the employer won't be subject to the penalties.  So some employers may be considering "encouraging" their employees who would be eligible for the credits or reductions to not enroll in health insurance through the Marketplace or to not claim available credits or reductions.

 

But employers need to be careful when reducing employees' work hours, especially if employees who would qualify for the tax credits or cost-sharing reductions are disproportionately affected, or in taking a position that could be interpreted as conditioning employment on not receiving tax credits or cost-sharing reductions.  The U.S. Occupational Safety and Health Administration (OSHA) has issued an interim final rule, summarized in this fact sheet, providing whistleblower protections for employees who are fired or are otherwise retaliated against by their employers for receiving an income tax credit or cost-sharing reduction by enrolling for health insurance through the Health Insurance Marketplace.  Retaliatory actions specifically mentioned in the fact sheet include firing an employee or reducing an employee's hours.  So while reducing your full-time employee count or "encouraging" employees to not receive credits or cost-sharing reductions may enable your business to avoid the "pay or play" penalties, it could expose your business to a whistleblower investigation by OSHA.

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