Affordable Care Act (ACA) Penalty refers to a financial penalty imposed on individuals or employers who fail to comply with the health insurance mandates established by the Affordable Care Act.
For individuals, the penalty applies to those who do not maintain minimum essential health coverage for themselves and their dependents. This penalty was calculated as a percentage of household income or a flat fee per person, whichever is greater, and was enforced during specific tax years.
For employers, the ACA mandates that applicable large employers (ALEs)—those with 50 or more full-time employees—must offer affordable health coverage to their full-time employees. Failure to do so can result in an employer shared responsibility payment, which is also known as the employer penalty. This penalty is assessed if at least one full-time employee receives a premium tax credit to help pay for coverage in the Health Insurance Marketplace.
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