Healthcare Laws Regarding Large Employer Groups: A Review of the Rules and the Potential Penalties

The Internal Revenue Service (IRS) and Department of Labor (DOL) laws establish guidelines for large employer groups regarding healthcare. Employers with 50 or more full-time employees must offer affordable, minimum essential health coverage. The Affordable Care Act (ACA) also established specific criteria for health plans to meet ACA compliance. In this article, we will explore the relevant tax information and ACA compliance criteria for health plans, identify what insurance brokers and employers need to know to be compliant, understand ERISA’s role in ensuring compliance, and discuss the difference between the A and B taxes in 2024. 

Tax Information for Large Employer Groups 

Large employer groups must comply with specific tax laws regarding healthcare to avoid penalty taxes. These laws require employers to offer affordable, minimum essential health coverage and comprehensive coverage to at least 95% of their full-time employees. If an employer fails to offer coverage, they may face penalties. 

Additionally, large employer groups must submit information about their employee health coverage to the IRS. This information includes details about the health coverage offered to employees, as well as information on which employees received coverage. This information is used to confirm compliance with the ACA’s coverage and affordability standards. 

ACA Compliance Criteria for Health Plans 

To be ACA compliant, health plans must meet various important criteria, including: 

  1. Essential Health Benefits: ACA compliant plans must cover essential health benefits, such as preventive care, mental health services, prescription drugs, and maternity care. 
  1. No Lifetime or Annual Limits: ACA compliant plans cannot impose lifetime or annual dollar limits on essential health benefits, ensuring individuals have access to necessary medical services. 
  1. Preventive Services: ACA compliant plans must cover preventive services, including vaccinations, screenings, and check-ups, without requiring cost-sharing from individuals. 

These criteria are designed to ensure that health plans offer comprehensive coverage and protect individuals from excessive medical expenses. 

What Insurance Brokers and Employers Need to Know to Stay Compliant 

Insurance brokers and employers must be aware of the ACA compliance status of their health plans. Employers must offer affordable, minimum essential health coverage to meet IRS and DOL regulations. Employers should also ensure that their plans provide comprehensive coverage to employees to meet ACA regulations. 

Insurance brokers should work closely with employers to review the compliance of their health plans. They should ensure that the plans meet all applicable ACA criteria and advise employers on any necessary modifications. Support from more knowledgeable sources may be helpful to ensure criteria are met to protect employer clients. 

By staying informed and proactive, insurance brokers and employers can access compliant health coverage that meets the regulations set by the IRS and DOL. 

ERISA’s Role in Ensuring Compliance 

The Employee Retirement Income Security Act (ERISA) establishes standards for employer-sponsored retirement and welfare benefit plans, including health plans. ERISA requires employers to provide plan participants with specific information related to the plan, such as a summary plan description (SPD), which details the plan’s benefits and coverage provisions. This transparency helps employees and plan participants assess compliance and understand their rights. 

ERISA provides clear criteria to employers on compliance with regulations, helping them avoid potential penalties or disputes with employees and including: 

  1. Fiduciary Responsibilities: Employer sponsors of Group Health Plans are considered fiduciaries and are obligated to act in the best interests of plan participants and beneficiaries. This requires them to prudently select and monitor service providers, manage plan finances responsibly, and provide accurate disclosures of plan information[1]
  1. Reporting and Disclosure Requirements: ERISA mandates that employers provide various plan documents and disclosures to employees. These include Summary Plan Descriptions (SPDs) which explain the plan’s benefits, eligibility criteria, and participant rights. Employers must also furnish Summary of Material Modifications (SMMs) to inform participants of any significant changes made to the plan[2]
  1. Non-Discrimination Rules: ERISA prohibits Employer Group Health Plans from unfairly discriminating against employees based on their health status or other factors. These rules ensure that employers cannot selectively offer better benefits to higher-paid or healthier employees[3]
  1. Mental Health Parity: ERISA includes rules that demand Group Health Plans to provide mental health and substance abuse benefits on par with medical and surgical benefits. This ensures equity and equal access to necessary mental health services for all plan participants[4]

Difference Between A and B Taxes in 2024 

In 2024, large employer groups may face two potential taxes related to healthcare: the A tax and the B tax. The A tax is levied on employers who do not offer health coverage to employees. The B tax is levied on employers who offer coverage but have employees who receive premium tax credits. 

Employers can avoid the A tax by offering minimum essential coverage to at least 95% of their full-time employees. Employers should also ensure their health plans include a comprehensive coverage plan to avoid the B tax. 

By staying informed about these potential taxes and meeting all applicable compliance criteria, large employer groups can avoid penalties and ensure that their employees have access to high-quality healthcare. 


Large employer groups must comply with specific IRS and DOL laws relating to healthcare, including offering affordable, minimum essential health coverage and comprehensive coverage to employees. Insurance brokers and employers must also ensure that their health plans meet the criteria for ACA compliance. 

ERISA plays a vital role in ensuring compliance by establishing transparency and information-sharing provisions for participating employees. Employers should be aware of the potential A and B taxes in 2024 and take steps to avoid penalties by offering minimum essential health coverage and a comprehensive health plan to their employees. 

By carefully reviewing the compliance of their health plans, remaining vigilant, and requesting guidance from experts, large employer groups can access compliant health coverage that meets the regulations set forth by the IRS and DOL. Enrollment First, Inc. has a team dedicated to keeping employers and insurance brokers up to date with current laws and regulations through the employer health coverage they offer. 


[1]: Essential Health Benefits 

[2]: Lifetime and Annual Limits 

[3]: Preventive Care Benefits for Adults 

[4]: U.S. Department of Labor: Compliance Assistance Group Health and Disability Plans 

[5]: IRS: Affordable Care Act Tax Provisions for Large Employers 

[6]: CMS: Employer Shared Responsibility Payment 

[7]: IRS: Understanding the Employer Shared Responsibility Provision 

[8]: CMS: Employer Payment Notice and Appeal Procedures