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Health Care Reform Management

There is no doubt that the Affordable Care Act creates new challenges for businesses as well as their trusted partners in payroll, HR, and benefits.

Our Position

Our commitment is to work with each of our clients’ trusted partners—health brokers, accountants, anyone who has a hand in helping in our client. It's PayDay has deep ties in these communities and we will provide them with all the resources they need to help their clients succeed and stay informed.

Bottom line—we will provide tools and support needed to comply, both now and in the future.

Employer Shared Responsibility / Affordable Minimum Value Coverage

Effective January 1, 2015, applicable large employers with 100 or more full-time equivalent (FTE) employees (and with at least one full-time employee obtaining a subsidy for coverage) could be assessed a penalty if:

  • They don’t offer employees and their dependents health coverage that meets established minimum essential coverage requirements, or
  • Employer coverage is determined to be unaffordable or does not provide minimum value.

Tracking Employee Hours

It is important for businesses to track monthly hours in order to determine if they qualify as an applicable large employer. This will determine which employees should be offered health insurance coverage in the coming years to avoid penalties.

An employee’s hours of service include:

  • Paid time (actual hours worked) or paid time off, including vacation, sick, disability, etc.
  • For hourly employees, actual hours must be counted. For salaried (non-hourly) employees, employers have three options:
  • Days worked method: Employee is credited with 8 hours of work per day of service.
    Weeks worked method: Employee is credited with 40 hours of work per week of service.
    Actual: Employer tracks actual hours worked.

Defining Full-time Equivalent (FTE) and Full-time Employees

Full-time employees are defined as working an average of 30 hours per week, or 130 hours per calendar month.

To calculate total FTE count, add hours of service for all non-full time employees in a given month (no more than 120 hours), and divide by 120. Then add this total to the number of full-time employees to determine if your business crosses the 50 FTE threshold.

Determining Employee Status / Rule of Parity

If an employer hires employees whose schedules will vary, or who will be seasonal employees, the employer will need to determine if such employees will regularly work 30 hours per week on average. The regulations under the ACA (Affordable Care Act) provide a method for making these determinations using a pre-determined look-back measurement period to count the employee’s hours worked, and an additional stability period to offer the coverage to the employee and complete the enrollment process. Once the full-time employees are identified, the regulations prescribe the length of time those employees must be offered health coverage, and when their status as full-time employees can be re-evaluated.

Employers can use the “Rule of Parity” that states an employee may be treated as a new employee if the period of non-employment is between 4 and 13 weeks, as long as the gap lasted longer than the time the employee worked for. An example of this is an employee works for 7 weeks and leaves for 9 weeks. Upon their return they can be treated as a new employee.

Form W-2 Reporting Provision

Employers with 100 or more employees are required to report the total value of certain employer-sponsored health benefits on each employee’s W-2. Simply forward your health premiums to your Client Service Representative and we’ll make sure you’re covered.

Employers with 50-99 employees receive transition relief until 2016.

Form 1095 & 1094

Form 1095 lists individual employee health information and Form 1094 is a summary of all of the 1095s. These are annual reports to be filed by 2/28 of the following year. Each form has two versions that need to be filed. 1095 & 1094 B, will be prepared by your insurance carrier. The 1095 & 1094 C, will be prepared and filed by It's PayDay.

Transition Relief

Employers with between 50 and 99 employees may take advantage of some Transition Relief provisions to avoid potential penalties in 2015. Employers who fall within this demographic should be utilizing this time to prepare for 2016 when all facets of the ACA will be enforced. For calendar year 2015, employers in the 50-99 employee range will need to file forms 1095 & 1094 on 2/28/16.

See the Latest ACA Coverage, Reporting, Payments & Credits from the IRS HERE