ACA is Real Now. Are You Ready?
The Affordable Care Act was signed into law way back in 2010. By design, it provided time for employers, insurers, and others to adjust to its new mechanisms. But as the complexity of the law became more apparent, the government implemented regulations granting extensions on enforcement of many of its provisions. Employer penalties have been postponed until this year. Thus, employers should be mindful now and throughout the year of the following issues:
- Are you a covered employer? Remember, employer penalties only apply to “large employers” who have 50 or more employees, including full-time equivalents. Note, however, that penalties for large employers with between 50 and 99 employees have been delayed until 2016. This year, penalties will apply only to those employers with 100 or more employees.
- Have you accounted for “contractors” that will be counted as employees who may be entitled to an offer of coverage? ACA requires that covered employers offer coverage to at least 95% (only 70% for 2015) of eligible employees, and their children, to avoid the “pay or play” penalty. However, the definition of employee is a common law employee test used by the Department of Labor, and some “contractors” fall within those bounds (if you give direction on the manner and means of their work).
- Have you assessed the affordability of your coverage? ACA imposes an “unaffordability” penalty on employers if their least expensive coverage (which also provides minimum essential benefits) for an individual employee costs more than 9.5% of an employee's earnings. “Earnings” can be evaluated in any of three ways – W-2 earnings, hourly rate or monthly salary projection, or the federal poverty line.
- Have you selected a measurement period, administrative period, and stability period for determining employee eligibility? Employers must determine how current employees' eligibility will be measured and set. The measurement period is a “look-back” period during which employees' hours are measured – to determine if they average 30 or more per week for eligibility. The administrative period is the time needed to set up a newly eligible employee for coverage. The stability period is the period during which an eligible employee must be offered coverage (based on the preceding measurement period) even if the employee's hours dip below 30 per week over the course of the stability period. For example, the measurement period may be November 1, 2013 through October 31, 2014; followed by an administrative period of November 1, 2014 through December 31, 2014; with a stability period of January 1 through December 31, 2015. Slightly different rules apply to newly hired employees.
We hope this checklist reminder is helpful in considering the most basic ACA requirements. If you have additional questions about your ACA status, please reply to this elert or contact your Elarbee Thompson attorney.