1. Penalties under Play or Pay Employer Shared Responsibility Two Penalties: Subsection (a) Subsection (b)

2. Subsection ( a ) Penalty Applies if the employer: Failed to offer substantially all* FT employees and dependents** an opportunity to enroll in an Eligible Employer Sponsored plan (EESP) for a month: Monthly Penalty = $2000 times # of FT employees minus 30 divided by 12 *”Substantially all” means 95% of full time employees or if greater 5 FT employees **Dependents means children to age 26

3. Subsection ( b ) Penalty Applies if the employer: Offered substantially all FT employees* and dependents opportunity to enroll in EESP for a month but coverage is not affordable or fails to provide minimum value (A/MV): Monthly penalty lesser of $2000 X # FT employees minus 30 divided by 12 OR $3000 X FT employees with subsidy divided by 12* *Rationale is, an employer offering coverage should pay less than an employer not offering coverage. EBIA 1/23 / Slide 21

4. “Safe Offer” An employer who offers affordable/minimum value coverage to all FT employees and dependents* makes all FT employees ineligible for an Exchange Subsidy therefore no Penalty. *children to age 26( including foster and step children) EBIA 1/23 / Slide 19

5. Affordable/Minimum Value Coverage Coverage is affordable if it costs the employee no more that 9.5% of the employee’s W-2 wages. ( for the employee only coverage as dependent cost is not considered for determining affordability) Coverage is Minimum Value if it covers 60% of an individual’s healthcare costs ( actuarial value). Minimum Value calculator available.