Some employers thought they had “dodged a bullet” this year when their hourly workers chose not to enroll in company sponsored benefit plans mandated by the Patient Protection and Affordable Care Act (PPACA) compliant plans. Business owners who feared the cost of the employer portion of the premiums were surprised, and often delighted, to find their medium range employees turning down the plans because of the high deductibles and employee costs ranging from $160 to $200 per month.

Business Owners were relieved to find they often were not required to fund either the premium of a full benefits program or the $2,000 penalty accessed for business with more than 50 full time employees.

But some business owners now face a new challenge.

First, employees who chose to not enroll in coverage at work are discovering they don’t have a subsidy when trying to enroll in the Covered California exchange and find non subsidized coverage plans unattractive.

Then they filed their income tax returns for 2015 and found they were being penalized $325 for each uncovered adult.

Now they are learning that the penalty for an uncovered adult is increasing to $695 for the 2015 tax year.

There are other rules, exemptions, and calculations that come into play but in general what we have is a fertile environment for class action suits against individual employers.

A suit against Dave and Busters in New York alleging that the restaurant chain changed employee work hours to avoid having to comply with the ACA is likely the first of many. Many expect class action suits filed against employers for not clearly explaining the disadvantages for an employee who chose not to enroll in the company plan.

Whether or not any of these suits are successful or even have merit is beside the point for businesses….the real issue is do you have coverage for the defense costs and potential judgements and/or penalties?

While the penalties associated with failing to provide coverage are technically a tax and not insurable there is coverage available for both civil penalties and judgements for PPACA related lawsuits and actions.You may have coverage in your insurance program… or you may not….

Somebody needs to check….