Insights on Implementing Obamacare at Your Company

Posted on 07-01-2014 by
Tags: Trending News & Topics , Affordable Care Act , webinar , business , Wage & Hour , trending news , billable hours

Just hearing the words “Affordable Care Act” can make you cringe. And that’s not even counting your political or economic views on the subject. You may have so many questions about how to keep your company compliant such as:

  • Does the ACA apply to my company?
  • Which new rules apply to which employers?
  • And, how do I count employees?

 Managing shareholder Cynthia Marcotte Stamer answered these and other questions during a webinar Cutting Through the Noise: Practical Guidance on Administering Obamacare & Other Health Plans. She has shared a few of her answers to these questions below.

 1.      Does the ACA Apply?

The first thing employers must do is determine which provisions of the Affordable Care Act apply to them, and when, Stamer advised. Obtaining a correct count of your employees and their hours is important for determining whether the pay or play penalties apply, whether your company qualifies for exceptions and whether many of the mandates impact your company.

“Knowing how many employees you have and getting that right is absolutely critical to understanding and planning what you need to do here,” Stamer said.

Counting presents several problems for companies. Varying definitions for employee classifications such as seasonal, leased and part-time can make it difficult to get it right. In many companies there is a chronic failure to keep track of workers’ hours. Stamer warned that companies must immediately clean up their record-keeping because the measurement period for next year occurs during the previous year—meaning right now.

Despite the publicly available information, many companies still do not understand that the number of employees affects a company’s duties, Stamer said. The pay or play shared responsibility rules of Section 49080H apply beginning in January to large employers—those with more than 100 full-time equivalent (FTE) employees (fewer than 4 percent of employers). It applies to mid-size companies of 50 to 100 FTEs in January 2016. Companies with fewer than 50 employees, never need to think about 4980H shared responsibility, Stamer said.

2.      Which New Rules Apply to Which Employers?

 

Rule

Small Employer

<25 FTEs

Medium Employer

FTEs

Large Employer

50–99 FTEs

Large Employer

>100 FTEs

IRC§162 Employer Premium Deduction

Yes

Yes

Yes

Yes

IRC§46R Tax Credit

Yes

No

No

No

IRC§4980H Pay or Play

(Transition Relief Delays Enforcement to 2015 For Employer of >100 FTEs and 2016 If 50–99 FTEs)

No

No

Yes beginning 1/1/2016

Yes beginning 1/1/2015

IRC §105(h) Self-Insured Health Plan HCE Nondiscrimination

Yes if self-insured

Yes if self-insured

Yes if self-insured

Yes if self insured

PHS §2716 Insured Non-Grandfathered HCE Nondiscrimination Excise Tax

$100 per day, per non-highly compensated individual discriminated against (delayed by Notice 2011-1 until further notice, plus a possible civil action to enjoin the discriminatory practice)

Yes

Yes

Yes

Yes

Code§125 Taxability of Contributions Discriminating In Favor of HCE or Key Employees

Yes

Yes

Yes

Yes

Contractual Obligations When Union, Government Contractor, M&A or Other Obligation

Yes

Yes

Yes

Yes

 3.      How Do I Count Employees?

It is important to note that different rules count employees differently. To determine if you are a “large employer” under Section 4980H, Stamer said you must:

  1. Accurately identify all “common law employees,” including seasonal employees, regardless of hours worked.
  2. Count the number of full-time employees who work on average more than 30 hours per week, per month.
  3. Calculate the number of “full-time equivalent employees” (total hours worked by all non-full-time employees, divided by 120).
  4. Calculate (step 2 result + step 3 result) x 1/12. Is the result greater than 100 in 2015 or 50 in 2016? If yes, go to step 5. If no, stop. Code §4980 does not apply, and you can concentrate on other aspects of the law.
  5. Seasonal employee exception:
  • If employer’s workforce exceeds 50 full-time employees for no more than 120 continuous days or four continuous calendar months during the calendar year; and
  • Employees in excess of 50 who were employed during that period were seasonal employees
  • If both “yes,” the company is not a large employer, and §4980 does not apply
  • Otherwise, the employer is a large employer for purposes of §4980H

For answers to other questions related to ACA Compliance, download the OnDemand Webinar.  

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