Who is responsible when an employee’s cost for coverage does not meet the ACA’s affordability standards? Our client unionized employees who get their health coverage through the unions, not the employer. One of these plans has set one cost for all union members, regardless of whether it’s single or family coverage. That cost does not pass the ACA’s affordability test. If one of these union employees go to the Marketplace and qualifies for subsidized coverage, does the ESRP penalty fall on the employer or the union?
Most union benefit plans are also known as “multiemployer” or “Taft-Hartley” plans, and they have special rules. An employer is treated as having offered coverage to an employee when a CBA requires the employer to contribute to a multiemployer plan offering affordable coverage of minimum value to the employee. Here, because the coverage is not affordable, the employer has not made a qualifying offer of coverage to the employee, and any shared responsibility payment that may be due under IRC Section 4980H is payable by the employer, not the Union. It does not matter that it is not the employer’s “fault” that the health coverage is unaffordable.