The ACA is a complex piece of legislation that breaks new ground in many ways. Even if you have experienced human resources managers on staff, it can still be difficult to fully understand and comply with the law.
San Diego, CA (PRWEB) April 30, 2013
The Affordable Care Act’s (ACA) “pay or play” mandate is fast approaching. As a result, says Syndi Dunn on The Chronicle of Higher Education, a growing number of U.S. colleges and universities are limiting the number of hours part-time employees can work each week. Doing so will keep those employees below the level at which employers are required to provide health insurance.
According to Marrs Maddocks and Associates, a San Diego insurance agency, this trend among U.S. colleges underscores the need for employers of all types and sizes to begin preparing for the financial impact of pay-or-play, which will go into effect on January, 1, 2014. The firm’s white paper, entitled “The Affordable Care Act: Preparing Your Business for “Pay or Play,” outlines steps employers can take to get their companies ready for the dramatic changes in employer health insurance brought about by the ACA.
“Starting next year, ACA requires large employers to offer their employees a certain level of health care coverage or face the possibility of penalties,” said Neal Stehly, executive vice president for MM&A. “Preparing your company to comply with this mandate starts with answering four questions that impact your status as an employer under the ACA.”
These questions include:
Who is considered a large employer? The ACA defines a “large” employer as having at least 50 full-time employees during the preceding calendar year. However, this threshold of 50 also includes full-time equivalents (FTEs), which are determined by totaling the number of hours per month worked by part-time employees and dividing by 120.
Which employers will face penalties? Depending on circumstances, there can be penalties for employers who offer health care coverage as well as for those who don’t. Under ACA, large employers that don’t offer coverage will face a penalty if any of their full-time employees receives a premium tax credit or cost-sharing reduction toward their exchange plan. Employers that offer coverage may still be subject to penalties if at least one full-time employee obtains a premium tax credit or cost-sharing reduction in an exchange plan because the employer’s coverage is unaffordable or does not provide minimum value.
What constitutes a full-time employee? Under ACA, determination of full-time employee status involves a month-to-month analysis. Applying the rules on a monthly basis could make it difficult for employers, so the IRS developed an optional “look-back” measurement for determining full-time employee status. Details of this method vary based on whether employees are ongoing or new, full-time or part-time, variable or seasonal. Also, there are special rules for employees who take unpaid leave or are rehired after a termination of employment.
What if the company has a fiscal year plan? Companies with fiscal year plans may find it difficult to make mid-year changes to their health plan’s terms. The ACA includes a special “transition relief” rule that makes it easier for these employers to prepare for 2014. This rule contains strict guidelines regarding how it can be applied, so companies should study the regulations carefully to make sure they are in full compliance.
“The ACA is a complex piece of legislation that breaks new ground in many ways,” added Stehly. “Even if you have experienced human resources managers on staff, it can still be difficult to fully understand and comply with the law. To protect your business and avoid paying unnecessary penalties, we recommend reviewing your health insurance plan as it relates to ACA with a third-party vendor that specializes in helping companies manage these issues.”
About Marrs Maddocks & Associates
Marrs Maddocks & Associates is an independent San Diego insurance agency with over 300 years of combined experience. Marrs Maddocks offers an educated, committed team that puts their clients first. They offer both business insurance and personal insurance from all of the major carriers. For more information, visit http://www.marrsmaddocks.com.