|
If you are scrambling to come to terms with the 2010 Patient Protection and Affordable Care Act (ACA), you are in good company. A poll of human resource managers by the Corporate Synergies Group immediately following the election found that around 20 percent reported they need to "speed up implementation" of required compliance with the law, and another 16 percent said they "don't know where to go from here." Under the ACA, employers with 50 or more employees will be subject to an "assessable payment" (i.e. the "pay or play" tax) if they don't meet the law's requirements beginning in 2014. Specifically, employers must provide "minimum essential coverage" to full time employees (FTEs) and their dependents. The coverage must be deemed affordable and provide adequate "value." Defining "Affordable"
What's "affordable?" The IRS has provided a "safe harbor" definition as limiting employees' contributions towards the cost to 9.5 percent or less of their W-2 wages. As for "value," the federal government is working on various methods of defining it. But if the benefit employers pay provides at least 60 percent of the value of total coverage, that might do the trick. Battles have been raging over the specific components of health benefits meeting the "minimum required coverage" test. But for now, the law firm Drinker Biddle is telling its clients in a recent report that "most employer-sponsored group health major medical coverage will meet this broad definition." In other words, employers can outsource that concern to the health plans that will be competing for their business, including those offering basic plans through health care exchanges. The IRS' latest detailed ACA guidance on the meaning of "full-time equivalent" requires a bit of explanation. It was offered, IRS states, "to encourage employers to continue providing and potentially to expand coverage by permitting employers to adopt reasonable procedures to determine which employees are full-time." The simple answer to who is a full-time is this: an employee who works on average at least 30 hours a week or 130 hours a month. But, the devil may be in the details. 90-Day Exclusion Limit
One safe harbor says that employers can hold off on offering health benefits to newly hired FTEs for up to 90 days. But what if it is unclear during those 90 days whether a new hire ultimately will work full-time? In that scenario, the plan "may take a reasonable period of time to determine whether the employee meets the plan's eligibility condition," according to Drinker Biddle. Safe harbors for the definition of FTE status for ongoing employees are more intricate. But in general, according to Drinker Biddle, you need to review the number of hours an employee worked during a "standard measurement period" to determine whether that employee will be deemed full-time for a future "stability period." The "standard measurement period" has to be "a period of time of 3-12 consecutive calendar months, as chosen by the employer," the firm states. And the "stability period" must be at least as long as the greater of these two options: six months, or the standard measurement period. Thus even if you test an employee's FTE status using only a three-month "look back" period, and that employee did work full time during that period, the employee must be assumed to be full-time for purposes of health benefit eligibility for the next six months. The safe harbor plot thickens for new seasonal employees and variable hour workers. While the rules are similar to those for ongoing employees, they take into account "that there is no historical point of reference for a particular employee." In some cases, and until the government provides further guidance, "employers are permitted to use a reasonable, good faith interpretation of 'seasonal employee,'" according to Drinker Biddle. For the full article, click Here. The information above should help clear up the mystery of the road ahead somewhat. But again, rest assured you are not alone in wondering what the future holds. As deadlines draw closer, the government will issue more and more guidance to help ensure you understand your obligations under the Patient Protection and Affordable Care Act. At HR&P we know what drives your company. We have built a reputation on providing exceptional customer service and administrative solutions that help companies improve productivity and profitability. Please give us a call at 281.880.6525 or visit us HERE and we will be happy to talk to you. About HR&P:
Since opening our doors in 2000, HR&P has offered the highest quality human resource outsourcing and payroll services to a diverse pool of clients. By processing your payroll, managing your benefits and overseeing your human resource issues, HR&P makes your workforce flexible and able to meet your changing business demands. Our ongoing goal is to continue to develop specific solutions for each client that suit their particular needs. Contact HR&P:
Name: Human Resources & Payroll (HR&P)
Address: 14550 Torrey Chase, Suite 100, Houston, TX – 77014
Ph. No.: 281.880.6525
Mail ID: info@hrp.net
URL: http://www.hrp.net
Related Articles -
Affordable Care Act, Patient Protection, Employee Benefits Administration, Employee Benefits Services, Human Resource Outsourcing, PEO,
| 
