Affordable Care Mandate Act       effective 07/01/15


As of July 1, 2015 penalties of $100 per day, per employee will apply to employers who provide payments to their employees’ individual medical policies not provided through a workplace Group Medical Plan. Prior regulations allowed for employers to reimburse employee health care premiums on a tax-free basis which typically benefited the employer and employee. However, under these new regulations this is no longer acceptable and will subject the employer to penalties. For example, if just one employee is out of compliance for one whole year, the employer’s penalty will be $36,500.00.


This Affordable Care Act (ACA) Mandate applies to all employers, including churches. The one exception to this rule applies to employers who only employ one employee. Employers that have only one employee can continue to reimburse healthcare premiums to their one employee on a tax-free basis.


To avoid penalties, an employer can do one of two things:

  • An employer can place the employee on an employer-sponsored Group Health Plan, or

  • The employer can increase the wages for the individual in order to allow the employee to pay for his or her health premiums out of his own pocket. These wages are subject to income tax. The restriction with this option is that the employer cannot mandate this increase in wages to pay for health insurance costs.

More specific information can be found by reading IRS Notice 2015-17.




Compiled by Church Financial Management. Church Financial Management is not designed to take the place of legal counsel, representation, services and/or counsel offered by accounting & legal professionals or specialists in other fields.