Three Questions to Ask If You Want to Avoid Healthcare Reform Penalties, Part 1

 

Like it or not, the Patient Protection and Affordable Care Act is here – all 2400 pages of it – and it isn’t going anywhere anytime soon. Although it’s been watered down from its original form, there’s still plenty of bite left over for Orange County employers who run afoul of the law.coveredca

So how do you make sure your employee benefits/group medical insurance plan measures up? A good first step to ensuring that you’re in compliance with state and federal laws is to go over it with three fundamental questions in mind:

  • Which of my employees are considered full-time for purposes of the law?
  • Does my employee benefits/group medical insurance plan meet minimum value rules?
  • Is my plan affordable according to PPACA regulations?

Ready? Today, we’ll go through determining which of your employees are considered full-time for PPACA purposes, in addition to covering the concept of a “variable employee” and what it means for your business.

Which of my employees are considered full-time with regard to the employer play-or-pay mandate?

The employer play-or-pay mandate is slang for the employer shared responsibility provisions of the PPACA. In a nutshell, what it means is that, starting in 2014, employers of more than 50 full-time-equivalent employees must offer those employees the opportunity to enroll in an affordable employer-sponsored heathcare plan meeting minimum essential coverage guidelines.

By law, a full-time employee is any employee who works 30+ hours per week. All well and good, but what if you employ ongoing personnel on a contingent basis and don’t know how many hours they’ll be required in a given week, month, or year? Are they full-time or not?

It depends. According to the IRS, what you’ve got there is a “variable employee,” and how you track their hours is critically important. If you want a little more info on benefits compliance in regard to these employees (and enjoy reading nearly impenetrable governmental guidelines documents) see http://www.irs.gov/pub/irs-drop/n-12-58.pdf and http://www.irs.gov/pub/irs-drop/n-12-17.pdf.

Asleep yet? If you’re still here, the gist of it is that you must establish a standard measurement period of three to 12 months to track the hours of ongoing variable employees (“ongoing” defined here as an employee who’s worked for at least one standard measurement period). Employees who work more than 30 hours in that measurement period are considered full-time for a subsequent period the IRS calls the “stability period,” which must be at least six consecutive calendar months and must not be shorter in duration than the standard measurement period. During that time, the employee is considered full-time for healthcare benefits purposes, regardless of the number of hours actually worked.

Of course, like all things governmental, it’s not quite that simple in practice (if any of this could be considered simple). Keep in mind that the rules vary for new employees and there are rules covering an optional administrative period, in addition to other pitfalls you need to look out for. Trust us, we’re just scratching the surface here, so be sure to check with Moore Benefits or another knowledgeable employee benefits consulting firm for detailed guidelines that’ll help you avoid substantial fines and save you from wading through documents like those linked above.

Stay tuned for Part 2 of this series, which will help you determine if your employee benefits/group medical insurance plan meets PPACA guidelines.

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