Note to readers; a longer version of this post originally appeared on HealthInsurance.org, along with a penallty calculator.
Despite the hullabaloo about the Affordable Care Act’s mandate that nearly everyone puchase heath insurance in 2014–or pay a penalty–the Congressional Budget Office estimates that only 1.4 percent of Americans will wind up paying the tax.
That is because the vast majority of us either have health insurance, or are exempted from the mandate for any one of a number of reasons. For example, at the end of 2014 you will owe no tax if:
- your income is low enough that your share of premiums (after federal subsidies and employer contributions) would total more than 8 percent of your income;
- your income is below the income tax filing threshold, and so you’re not required to file taxes;
- you were uninsured for less than three months of the year (If over three, the penalty is pro-rated);
As a result the Urban Institute estimates that just 6 percent of the population (roughly 18 million Americans) will even have to consider the question: “Should I purchase health insurance, or pay a tax?” That’s right: a whopping 94 percent of the population will have no reason to worry about paying a penalty.
And 11 million of that 18 million will be low-income or middle-income Americans who are eligible for a government subsidy to help cover the cost of their premiums. Chances are, most of them will take the government up on its offer.
That still leaves about 7 million Americans who are uninsured today and won’t qualify for a subsidy. But many of them lack coverage because they suffer from a pre-existing condition. As a result, most insurers won’t sell them a policy, and those who will cover them demand sky-high premiums. Under the ACA, insurers will no longer be able to shun the sick; nor will they be able to charge them more.
If You Decide to Gamble, And Go Without Insurance, How Much Will You Pay?
Inevitably, some people will decide not to buy comprehensive insurance because they’re healthy and wealthy enough that they feel they can cover their own medical expenses. Others wil refuse to purchase a policy as a matter of principle: some Americans just don’t like the insurance industry, and resent being told they should buy their products.
The size of the tax they pay will depend on how many people are in their household, and how much they earn.In 2014 an individual who earns $35,000 and chooses to opt out will owe just $95– though if he earns $250,000, he’ll wind up paying $2,500 or roughly 1% of adjusted gross income above $9,500. (The tax applies only to income above and beyond the filing threshhold; in 2011 that was $9,5000 for most singles and $19,000 for most married couples. )
Over the next two years, the penalty rises. In 2016, a middle-income family of four earning $60,000 would owe about $2,085 – still far less than the tax a more affluent family would pay. (For example, a household reporting adjusted gross income of $200,000 would owe roughly $4,300. In other words, this is a progressive tax
But there is a cap on how much any household will owe: according to the law the tax cannot exceed the national average premium for “bronze level” health plans offered through exchanges. These bronze plans will cover 60 percent of medical expenses, and the Congressional Budget Office (CBO) estimates that in 2016 the average premium would be about $4,750 for single policies and $12,250 for family policies. (This sounds expensive, but keep in mind that middle-class Americans who don’t have employer-based insurance will receive subsidies from government to help cover the cost. For example, a family of three earning $54,930 would end up paying just $5,218 for a “silver” plan that covered 70% of the family’s medical expenses.
Why is the penalty so high? Because if a healthy wealthy person decides to opt out–and then later becomes sick– he will be able to change his mind and buy insurance. The point of the Affordable Care Act is to make sure that everyone has access to healthcare; no one will be barred from the system. At the same time, it’s not fair to let someone wait until they are sick before entering the insurance pool while others have been paying into that pool for years. So those who choose not to buy coverage will pay penalties in lieu of premiums –and those taxes will keep our heatlh care system afloat.
Penalty Calculator
I’ve written a more detailed post for healthinsurance.org describing exactly how the penalty works, and answering some “frequently asked questions” about the tax. I have also helped healthinsurace.org develop a penalty calculator. If you type in a few facts about yourself and your household, the calcualtor will tell you how much you would owe in 2014, in 2015 and in 2016.
I am concerned about the persons for whom health premiums will be over 8% of income, even after subsidies.
Let me try and create a composite person in this group.
They are 55 years old and their age-rated premium (even in the exchange) is $700 a month.
Their federal subsidy is $400 a month.
So their out of pocket premium is $300 a month.
But their income is just $30000 a year. 8% of that is
$2400 or $200 a month.
They would not get Medicaid if they were single and had that income.
What I think you are saying is that they could go ahead and pay their $300 a month, it is not such a bad deal.
But if they did nothing, they would pay no tax.
Is this correct?
Bob–
Yes, if they chose to opt out, they would owe no penalty.
But $300 a month of Comprehensive health care is a Very Good deal. (Today, most people in that tax bracket have very spotty health insurance— unless they work for a very wealthy corporate employer.)
Under the Affordable Care Act, both people who don’t have employer- sponsored insurance, and those who work for smaller companies will enjoy the protection of the ACA:
–No co-pays or deductibles for preventive care
–Dental and vision care for children
–There will be no limit how much the insurer will pay out in a given year or over a lifetime.
(If you develop cancer or MS–or have a baby that needs to stay in the hospital for 2 months, this means you can keep your home, and won’t be wiped out.)
–If you are a young person, and unexpectedly become pregnant, your insurance Must cover prenatal care, maternity benefits, post-natal care. (Today many polices do not cover any of the above.)
–Also , under the ACA, there is a cap on how much these policies can ask you to pay, out of pocket, in co-pays and deductibles. (For people earning $30,000, the cap is low. It’s higher if you earn more.)
So all and all, what you’re getting is well worth the cost (after the subsidy). Even a family earning $30,000 can afford this. I would cancel cable (which these days is a rip-off)– to have this insurance.
(There are good altneratives to cable.)
Let me preface my comment by saying that I have been in employee benefits for almost 30 years.
It is a little presumptuous to assume that the Insurance Exchange premiums will be affordable when the rates won’t even be published until mid-2013.
Considering the narrow rating bands between the young and the old the younger ages will be paying more than they are now for like-coverages.
And employer health plans, regardless of the size of business written, cover pre and post natal care because in most states maternity coverage is mandatory.
And, if someone can truly wait until they get sick to get into the system the ACA act will indeed become the Risk Pool of choice.
The bottom line is that without hard numbers as to what people will be paying in premium all of the net-cost projections are speculative at best.
Henry–
Thank you for your comment.
You are absoutely right that we don’t know how high the premiums will be. All the CBO can do is “guesstimate.”
However, if premiums are higher, the subsidies also will be higher, making up the difference. So for low-income and middle-income Americans eligible for subisidies, higher premiums should not prevent them from buying insurance.
In some states, you are right, younger people will be paying more. In other states (such as New York, where, today, insurers can not charge older customers more and cannot charge more because of pre-existing conditions) younger people may well wind up with premiums that are about the same as they are today. They could even be lower if enough young, healthy people who do not have insurance today join the pool–contributing premiums, but not needing a great deal of care.
Also in some states, older people will pay premiums that are 3 times higher, in other states–and so younger people will not be paying for a very large share of their care. In other states, older people will pay twice as much, and in still other states they wil pay no more than younger people.(The ACA lets insurers charge older customers up to 3 times as much–but only if state law doesn’t bar or cap “age-rating.”)
As for employers providing pre-natal care and maternity benefits–only 44% of Americans now have employer-based insurance. The majority do not. http://www.gallup.com/poll/152621/fewer-americans-employer-based-health-insurance.aspx
In the individual market where women must buy insurance if they are self-employed, un-employed, or working for an employer who doesn’t offer affordable insurance coverage, only 13% of policies cover maternity. And if a women becomes pregnant and wants to “upgrade” to a policy that does cover maternity, she will find that she can’t. (Pre-existing condition.)
Finally, and most importantly, today premiums are so high because the underlying cost of care is so high–mainly because of too much overtreatment, and because we overpay for some very high-priced products and services. Some hospitals charge far more for exactly the same relatively low-tech service (for instance normal delivery of a baby) than others. (One reason–and this is just one reason–is that some hospitals don’t let nurse-midwives deliver. Only an Ob-gyn can deliver.. They are more expensive, and reserach shows, are more likely to encourage women to “induce” labor and to have a C-section. (This is why many women, including my daughter, who recently had a baby prefer nurse-midwives.) Outcomes are as good or better. The nurse-midwives also offered excellent pre-natal care.
There is good reason to believe that under health care reform, hospitals, in particular will be able to cut their costs, and thus their bills will be lower. Already, the bills they are sending to Medicare are lower, and when it comes to demanding better care at a lower cost (fewer preventable mistakes, fewer preventable readmissions, fewer unnecessary tests, catherizations, inappropriate implantation of debribillators, etc. private insurers say they are going to follow Medicare’s lead.)
Many private insurers will be joining with doctors and hospitas to create “accountable care organizations” where they will share in the savings. The insurer and health care provider will be on the same page, with one goal: keeping patients healthy, keeping them out of the hospital (if at all possible) and making sure that hospital stays are as well co-ordinated and efficient as possible.
Will this happen all at once in 2014?
No.
Can we “break the curve” of health care inflation, and even reduce the cost of care as a %age of GDP? Yes–even though our population is aging. Other countries have done it. (Sweden, Japan)
In all seriousness we should not try to make a “break the curve” comparison between the U.S. and other countries. There are no comparisons relative to population / cultural demographics that could result in any meaningful or understandable conclusions. Even to try is nonsensical.
Henry–
I’m not sure why you believe that the U.S. can’t be compared to other countries.
If they are able to provide high quality care for far less, then there is no reason that we can’t too.
I realize that some will say that our “demographics” are different. (What they mean is that a larger percentage of our population is non-white.) But even when you only compare white Americans to white citizens of other countries, you find that we spend more and our outcomes are not as good.
Yes, obesity is a bigger problem here, but cigarette smoking is a much larger problem in France. Yet when it comes to lung cancer, they do better than we do.
Rates of alchoholism are also much higher in some
European countries.
The big difference between the U.S. and other countiries is that we tolerate much higher rates of poverty. That, along with the high cost of care, and lack of insurance, goes a long way toward explaining the poor health of our population.
Good discussion, here are several comments:
1. It is hard to say that one country ‘does better’ at treating cancer unless you look at death rates. My limited knowledge that a person in the USA who is diagnosed with cancer lives several years longer, on average , than anywhere in Europe.
Those extra years cost billions. I do not have the wisdom to say if the spending is worth it. But I can say that that extra spending might make us ‘look worse.’
Also, the sheer price of cancer drugs in the US, with all of our vicious price-gouging, might make us ‘look worse.’
2. One pet peeve of mine, not a major issue…..that the ACA takes credit for ‘removing lifetime limits on insurance contracts.’
I have administered health insurance plans. The cases that test lifetime limits always involve tremendous price gouging by hospitals. When a child needs three open heart surgeries, the solution is not to raise that child’s insurance limits to $2 million. The solution to cap the price of surgery at $40,000, so the child could three or even six surgeries and still stay within modest insurance limits.
Many Hospitals rely on million dollar claims to balance their budget. It is a very unstable system and drives up insurance rates.
People who do not have a computer access and are uninsured need to have this info. What do we have in place to help them navigate this new health care reform mandate?
Marie–
Good point. The Exchanges will provide information and help for people who don’t have computer access–answering
questions by phone, and distributing printed information.
Obama and Democrats said all Americans would have choice. However, if an individual, couple or family is found eligible for expanded Medicaid, they will not have a choice b/c the exchange is not allowed to sell this income-segment of the population a subsidized plan. Maybe Obama and Co. meant that these folks would have a choice between Medicaid or the tax penalty.
This is blatant discrimination. Period. And those who use Medicaid benefits at ages 55 through 64 will be subject to the federally-required estate recovery program. Under this requirement, states are required to recover assets of a deceased person who used RX and hospital benefits at the ages mentioned above BUT a state can recover assets for any and all Medicaid benefits received. The state keeps a running tally. According to several attorney-prepared documents on public health, there could also be interest and fees.
Estate recovery disregards wills and homestead acts. Heirs are chopped liver.
This is unconscionable, particularly under a mandate to purchase health insurance or pay a tax penalty. Furthermore, one can accurately say that Obamneycare not only discriminates against low-income citizens, it also exploits them.
He said mandated health insurance. Unfortunately, millions will be getting a mandated collateral loan.
This was a big issue in Massachusetts, the laboratory of health “care” reform, and after much public outcry, two years into the MA plan, powerplayers tried to cover this over by adding text to the MassHealth application which was used for the state’s subsidized plans. The additional text was a red alert and would require that MA residents keep on the alert for changes to policy which most do not have the time to do or wouldn’t know where to begin.
I see by your article and responses to comments that you are an ardent fan of Obamneycare and have even gone so far as to suggest that people could give up cable for an insurance plan. People in low-income brackets can’t afford to go to the movies and buy concert tickets so perhaps basic cable or cable with one extended tier is their entertainment. Do you think these folks should live under a rock?
Obamneycare is going to harm millions just from the standpoint that it is regressively based on prior year income and also contains paybacks if income during the current year is $1 over the former year FPL. How do you think people with low incomes are going to be able to pay upwards of $695 to $2,500 back to the IRS not to mention a higher premium b/c their income increased slightly – even if by $500 – which will not cover the costs they just incurred. And if their current year income is $1 over 400 percent FPL – maybe mid-year they found a job with bennies – they will have to pay back the entire subsidy.
Oppressive. Keeps people from becoming the best they can be. Kills incentive even for those who want or need an extra part time job to make ends meet or to save for a vacation or education.
By all accounts, Obamneycare is involuntary servitude and will harm the very people it purports to help.
Perhaps a small number of Americans will be helped but how many is it OK to exploit in order to benefit a few?
(for the record: I am not a Republican or a Democrat so my comment is not political.)
I used to help write federal healthcare policy for the congressional physicians on the U.S. Senate HELP Committee.
As someone who actually saw the Affordable Care Act being drafted in Congress, even I know that there is a way to opt-out of the law without being penalized. You can find the actual language of the opt-out option in Section 1555 of PL 111-148 (formerly known as the Affordable Care Act). The language in this section clearly states that individuals and companies can opt-out of the law without being penalized.
I guess I’m very confused, but the IRS just released a cost estimate for a family of 5 under the minimum “bronze” plan and they estimated the yearly cost to be $20,000!! http://cnsnews.com/news/article/irs-cheapest-obamacare-plan-will-be-20000-family
In their example, they assumed the family (2 parents and 3 children) were making $120,000 per year and would thus owe a penalty of $200/month ($2,400 a year) in 2016 should the family forgo health insurance.
That said, I’m confused as to why they would owe a penalty at all? I thought the law stated that an affordable policy would cost no more than 8% of adjusted gross income and under the IRS’ own example, shouldn’t any policy premium in excess of $9,600 per year (8% x $120,000) therefore exclude them from a penalty should they decide to forgo the insurance?
I’m currently self employed and my wife and I make close to the example illustrated above, yet we would not qualify for any insurance subsidies and most certainly cannot afford a $20k policy!!!
What am I missing here? This sounds disastrous to me!
Rick–
First, you should know that in 2012 the average family plan cost $15,745. And in 2012 the average plan did not
include free preventive care. (Under the ACA, all family plans will provide preventive care without co-pays and the
deductible will not apply).
$20,000 seems, to me high for what a plan will cost in 2016– increases in the cost of health care have been slowing. Still, 2016 is 4 years later and if premiums increased just 3% a year (much less than in the past when they have jumped 8% a year) that would take us to roughly $17,745. ($15,745 plus about $2000)
Keep in mind that this is an average, and it includes both the employee’s share of the premium and the employers’ share.
If you live in a part of the country where health care is less expensive (say, Davenport Iowa rather than Manhattan, of Los Angeles) the premium would be less. If you work for a large corporation that self-insures and pays an insurance company only to administer the plan, the total premium might well be less.
On the 8% of your income rule: The rule says that if YOUR SHARE of the premium exceeds 8% of your income, you owe a penalty. In 2012, when the total premium for a family plan cost $15,745 the typical emmployee paid about $4300 of the premium. His employer paid the rest. So if, in 2016, a plan cost, say $18,000 the average employee might contribute
$4500 (I’m assuming his share of the premium goes up 3% a year for 4 years).
If you earn $120,000, $4500 is less than 8% of your income. If you don’t sign up for your employer’s plan, you would hace to pay the penalty.
But what if you don’t have an employer who offers health benefits? Under the Affordable Care Act, if your employer doesn’t offer “affordable, comprehensive insurance,” you may well qualify for a generous government subsidy that helps you pay the premium. A middle class family with 2 or 3 children might wind up paying about $5500 for a family plan, with the government paying the rest.
But for a family of 4 to be eligible for a subsidy you must earn less than 400% of the federal poverty level–today that would be $92,000. In 2016, the number would be somewhat higher.
Median family income is about $65,000– half of all families earn less than %65,000; half earn more.
So a family earning over $92,000– let’s say a famimly earning $100,000– is Not middle-class. They’re in the top 10% and earn more than 90% of all other American families. http://www.newrepublic.com/blog/plank/107307/whos-middle-class-and-whos-not# That’s why the government isn’t asking taxpayers to subsidize their insurane.
What we don’t know is how high premiums will be in the Exchanges where familes buy their own insurance. Much depends on where you live. Health care costs are 20% lower in some parts of the country than in others. The age of the head of household
also matters. If the father is in his fifties, insurers can charge 3 times as much as they would if the head of the
household were 35 or even 40.
So a young family living in the midwest would wind up paying much less than a 55-year-old’s family living in NYC.
The ACA defines “affordable insurance” as an individual plan that costs no more than 9.6% of income. It doesn’t specify what’s affordable as a family plan.
Finally, the good news is that a family buying its own insurance in the Exchange will wind up with very good insurance:
all “essential benefits” will be covered, total out of pocket expenses will be capped (even if the whole family is in an auto accident and two of them spend a month in the hospital, they won’t have to sell their house to pay the bills. No more medical bankrupticies.) INsurers also won’t be able to cap how much they will pay out in a given year–or over the course of a lifetime. If your child has cancer and undergoes six years of treatment, the insurer can’t say–sorry, you’ve reached your life-time limit–no more reimbursemnets. And insurers cannot charge you more if you suffer from a pre-existing
condition.
Still $18,000 would be a lot for a family earning $100,000 to pay for heatlh care. This is why we have to bring down the underlying cost of care. Reserachers say that up to 1/3 of our health care dollars are now wasted on over-priced drugs and devices, unnecessary tests and procedures (including surgries that provide no benefit) and unnecessay hospitalizations.
If we could squeeze even half of that waste out of the system, insurance premiums could be significantly lower.
My confusion regards “unaffordable employer sponsored plans”. My husband’s company does offer healthcare, but to cover our family of 3 it is in excess of $720 a month. This is well over 8% of my husband’s approximate 46K annual income – in fact, it rounds to 19%. But it *is* offered. I am not sure if we qualify for subsidies because of that. (No, they don’t have a cheaper plan.) Where does that leave us?
Carrie– an “affordable” plan is defined as a plan that costs no more than 9.5% of an employee’s income.
But very recently, the IRS ruled that this refers to the cost of covering the employee- only – not the cost of covering dependents. The insurance will still be considered “affordable” even if it costs more than 9.5% for a family pla
If, at your husband’s company, the cost of ccovering him would cost more than 9.5% of his income then you family can buy insurance in an Exchange, and be eligible for a subisdy. (To estimate the cost of covering him under a family plan, check what an individual plan would cost at your husband’s company. If it costs more than 9.5% of his income you can go to an Exchange.
But if individual insurance costs (or the cost of covering jusst your husband under a family plan) costs less than 9.5% of his income you can’t do that.
One solution: if you also work, you might get coverage through your emplyoyer while your husband gets coverage through his employer. Whoever has better insurance should put the children on a family plan with their employer.
Alternatively if your husband belongs to a union, he might find better family coverage under a union plan.
It’s possible that a court will over-rule the IRS interpretation of the law– we’ll have to wait and see.
Finally, there is a good possiblity that the Federal govt will decide to expand SCHIP–gov’t health insurance for low-income children– and if so your children might well qualify. Then you and your husband could each buy individual insurance through your repective employers, and sign the children up for SCHIP.
In reply to Carrie – sounds simple, right!?
What a joke. This whole thing is a giant scam and undermines my individual freedom to choose what policy I wish to buy. My premiums keep going up each time a new portion of the law gets implemented, so I ask, where’s the $2500 annual savings the President promised!! I won’t hold my breath…
I proudly earn just enough which puts my family over the threshold for a subsidy so I will especially get hosed by the inappropriately named Affordable Care Act…The average person has no idea what they’re in store for….
OK so I opt out and decide to just pay the penalty. I become sick and go to the emergency room. Who pays the emergency room bill? Who pays for my ongoing care, if I need ongoing care?
Carl–
Not all of the details have been worked out, but there is talk of setting up enrollments periods when people who
deicided to opt out can change their minds and sign up for insurance. If that happens you would have to wait until the
next enrollment period (in 3 monhts? in 4 months) before you could sign up for insurance. In the meantime you would have to pay your own medical bills, including the ER bill0
Alternatively,HHS could decided to charge you more for insurance if you don’t sign up initially.
Btw, if you went to an ER, the ER would be required, by law, only to “stablize” you. This is defined is
putting you back together so that you could walk out of the ER under your own power. If the ER couldn’t do that,
it would admit you, but again, the hospital would only be required to stabilize you. If you needed an expensive
operation, you wouldn’t get it unless you could pay for it, or make a downpayment on a credit card.
Sugeons don’t take IOUs.
Many people don’t realie that ERs can and do turn people away if they are able to walk. In Money-Driven-Medicine
I write about a man who was mugged, and his jaw shattered. He went to 3 ERs by the time he found one that woudl take him. (He was able to walk, but by the time he got to the 3rd ER he would barely talk & was drolling blood. The doctor at the 3rd ER realized that his jaw could become infected (which lead to a fatal infection) and that if he had to wait until the next day to see a doctor, probably his jaw would have to be re-broken. The ER doc then called in a favor from a friend / surgeon who agreed to treat him.a surgeon to treat him.
By the way, the patient was a U.S. citizen and had proof. Just no credit card.
So if someone decides to “opt out” they are taking a serious risk.
Can someone, ANYONE please help. I am a part time paramedic. My employer has limited me to the 30 hour a week to avoid having to give me benefits. BUT I already have health insurance through my spouse. Is there not a way to “waive” this from my employer and work 30+ hours with out taking benefits and not having to pay all the fines?
Trish–
Your husband’s employer may or may not be willing to continue to offer you insurance. He is not required to do this, and increasingly, employers resent paying for another employers’ workers. If your employer values you and want to keep you, it is his reponsiblity to offer you benefits–it’s not the responsbility of your husband’s employer.
If your husband’s employer decides to continue to cover you that would be great.
But, No there is no waiver for your employer because he has managed to fob off the cost of your insurance onto another employer.
If you’re a paramedic, I’m guessing you work for a hospital or an ambulance company. It is incredible that any company in the health care sector would try to avoid prividing health insurance for its employees. (They hope to make more money as a result of universal coverage–they will have more paying customers. But they don’t want to take part in paying for it??/)
You might want to talk to other paramedics in your areas about this, and contact your local newspaper or televison stations.
This is a story that many would find interesting.
Io other industries (particularly chain restaurants) when employers have threatened cutting employees back to part-time in order to try to avoid insuring them, customers have threatened to boycott and the employers have backed down.
Also, if you and other paramedics in your situation threaten to quit because they are being cut back to part-time, your employers may well reconsider. (I would urge you to begin looking for another job. You may well find that others who employ paramedics offer health benefits.)
My wife does not work and hasn’t had insurance coverage in years. Will she be forced to pay a penalty?
James–
Yes she will. The goal of health care reform is to have everyone covered. Otherwise, when your wife becomes sick (the rest of us will wind up paying her medical bills– unless she can pay them herself. If she winds up in a hospital (most of us do at some point in our lives, often more than once) and owes, say $40,000, she might not be able to pay the bill. The hospital then charges the rest of us more, to make up for her unpaid bill.
But the good news is, depending on how much you earn, she may be eligible for a subsidy. (Your household income determines eligiibility.)Google “affordable care act” and “subsidy calculator” to see whether you qualify.
Finally, you shoud be glad she is getting insurance. Unless you are very, very wealthy, if she is uninsured, she risks not getting the treatment she needs. If she is diagnosed with cancer and goes to a hosptial ER they have to “stabilize” her (this may include admitting her), but they don’t have to treat her (chemo, radiation, surgery). Many people don’t realize this. But the fact is surgeons don’t take IOUs.
A group has an August 1, 2013 renewal. They have a grace period to comply with the 60% of the actuarial value and the 9.5% W2 until August 1, 2014. They have employees that decline at open enrollment and do not have other coverage. Those employees are then required by PPACA to go to the exchange and get coverage effective January 1, 2014 or face a penalty. If they opt to face the penalty (I believe it is $95 the first year), and then decide they want to join the employer plan effective August 1, 2014 during open enrollment, does the IRS prorate the penalty, do they pay the $95, or do they pay nothing?
In addition, can I assume if the employee does go to the exchange and gets the subsidy, the client is not liable to pay the $3000 fine until August 1, 2014 and not at all if the plan is compliant on august 1, 2014.
Lisa-
I doubt the IRS would pro-rate the penalty.
You owe a penalty if you are uninsured for 3 months during the year.