Assume Employer X is a software development company with 50 full-time employees40 are software developers whose annual income exceeds $120,000, and 10 are administrative assistants with annual income, after overtime, of no more than $40,000. None of the 40 software developers will be eligible for a premium tax credit or cost-sharing subsidy under the ACA; they are too highly compensated. Thus, Employer X is in a position of being able to avoid the penalty merely by offering health coverage to 10 of its 50 employees, which it should be able to obtain on a small business (SHOP) Exchange. It may exclude its 40 highly compensated employees from eligibility for this coverage (or require them to pay the full cost of coverage) without being exposed to the Employer Mandate penalty. And by either narrowing the eligibility for health coverage only to its 10 administrative assistants, or passing on the full cost of coverage to its software developers, it considerably reduces the risk that employers will have to bear the inflation in health costs associated with providing health coverage to the entire workforce