Free Rider Penalty Calculator


Estimate Which Employees May Trigger a Free Rider Penalty

There are many open questions about the Free Rider Penalty, which will need to be answered by regulations. The interpretation on which the calculator is based represents our current understanding of the statutory language in the absence of regulatory guidance. Other interpretations may be equally valid. In other words, the calculator is not meant to provide all of the information an employer will need to comply with the Free Rider Penalty. To learn more, Click Here.

Calculator Information

Annual Premium

Enter the lowest amount an employee would have to pay for the year for employee-only major medical coverage.

Free Rider Penalty

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Free Choice Voucher

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Free Rider Penalty / Free Choice Voucher

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Note that this only looks at the affordability aspect of the Free Rider Penalty – the employer will have to perform a separate calculation to determine whether the coverage is adequate.

American Fidelity Assurance Company does not provide tax or legal advice.

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  • Information about Calculating the Impact
    Beginning in 2015, if an employer with 50 or more full-time equivalent employees either does not offer health plan coverage to full-time employees (30+ hours per week), or offers coverage that is inadequate (the actuarial value is less than 60%) or unaffordable (the employee must pay more than 9.5% of household income in order to participate) and an employee with household income of 400% of the Federal Poverty Level or less receives Federal premium tax credit to purchase Exchange coverage, the employer will owe a Free Rider Penalty.

    The impact of the Free Rider Penalty depends on the employee's cost of an employer’s health coverage compared to the employee’s income. The calculator will help you estimate whether you have employees for whom you may owe a Free Rider Penalty.


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