ACA Employer Responsibility: “Pay or Play” (Delay Announced) Large Employer Subject to “Pay” if they do not “Play” – Starting in 2015, applies to employers with 100 or more FTEs (Full Time Equivalents)
- Offer Minimum Essential Health Care to 70% of employees effective on the start of the plan year beginning on or after January 1, 2015 to 95% of employees for plan years that begin in 2016
- Offer Health Plans that have “Minimum Value”
- Offer Affordable Health Plans using one of three IRS safe harbor formulas
Starting in 2016, applies to employers with 50 – 99 FTEs
- Offer Minimum Essential Health Care to 95% in 2016 and beyond
- Offer Health Plans that have “Minimum Value”
- Offer Affordable Health Plans using one of three IRS safe harbor formulas
Failure to Meet Above, Employer “Pays” ACA Employer Responsibility Full Time Employee ≠ FTE For 2015, most of the ACA provisions apply to “large employers” with 100 FTEs or a combination of full-time and part-time employees that equals 100 “full-time equivalent” (FTE) employees. FTE count is not the same as “full-time employee” count. The employer will need to calculate its FTE count by adding:
- Full-time employees that work 30 or more hours per week, plus
- Part-time and seasonal employees (add total monthly hours worked by these employees ÷ 120 hours per month), then
- Adjust for seasonal employees who worked no more than 120 days
- (Remember to count employees that work for a controlled group or under a predecessor employer)
To determine 2015 large employer status, an employer may use a consecutive 6-month period during 2014 instead of the full 12 months Variable Hour Employees The ACA shared responsibility taxes hinge on whether a large employer (100+ FTEs in 2015, 50+ in 2016) offers eligible health coverage to “full time” employees. If at the time of hire, it cannot be determined that an employee is reasonably expected to work at least 30 hours per week, that individual is a “variable hour employee.” Large employers will identify which variable hour employees are treated as “full time” and benefits eligible by:
- Calculating hours during a specified period of months (a look back/measurement period), and then
- Locking in their employee status (e.g. full-time) for a subsequent specified period of time (a stability period)
Timeline differs for new employees vs. ongoing employees
- Measurement period: A look-back period during which hours the employee works are tracked to determine whether the employee is working, on average, 130 hours per month and is considered to be full time. The measurement period can be 3 to 12 months.
- Stability period: A look-forward period during which an employees’ status is locked in. Worksite employees determined to be full-time based on hours worked during the measurement period are eligible for coverage, regardless of the number of hours worked during the stability period. The stability period can be no shorter than 6 months or the length of the measurement period if longer.
- Administrative period: Up to 90 days; provides employers with time to review the results of the measurement period, determine which employees are “full-time” and benefits eligible during the stability period, and then provide those employees with an opportunity to elect coverage.
Leave a Reply