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What is ESRP?

ESRP is an acronym for Employer Shared Responsibility Payment. This is a payment that an applicable large employer (ALE) is required to pay the IRS unless it offers minimum essential coverage to at least 95% of its full-time employees. This is a provision under the Affordable Care Act that only applies to ALEs. This includes government entities and tax-exempt organizations as well. Many employers do not meet the qualifications to be considered an ALE, and so would not be subject to ESRPs, but it’s important an employer knows for sure before failing to make the payment.

 


Learn more about ESRP

When do I need to be aware of ESRP?

If you run a business and employ a minimum of 50 full-time employees during the previous calendar year, your company is considered to be an ALE. If you offer your full-time employees an affordable option for health insurance, and it provides them with the minimum value needed, you may not owe an ESRP. If as an ALE you don’t offer that minimum, valuable coverage, you might owe an ESRP to the IRS.

What is important to know about ESRP?

As an ALE there may be some conditions that still require you to make an ESRP, even though you provide your full-time employees the minimum essential coverage. You should understand this and other details:

  • “Minimum value” and “affordable” are terms not used lightly in the Affordable Care Act, so exact compliance is essential to doing it right.
  • There are two different types of ESRPs, and they are calculated differently, but one employer would never be subject to paying both.
  • Only one employee needs to be receiving the premium tax credit to purchase coverage through the Marketplace for an employer to owe an ESRP.
  • In general, an employee is considered a full-time employee if for one calendar month, he or she averages at minimum 30 hours of work per week, or averages 130 hours of service in that one month.