There’s another wave of health care reform mandates under the Affordable Care Act (ACA), commonly called “Obamacare,” that employers need to know about.
These “play-or-pay” mandates will require many companies to make changes in whether and how they provide health care benefits to their employees, and employers who fail to comply face significant penalties. Though not effective until January 1, 2014, employers are wise to start thinking about these issues now.
Below is a list of the top items to consider.
• Determine whether you are a “large employer” subject to the coverage mandate. All employers with an average of 50 full-time equivalent employees during 2013 will be required to offer health coverage. Full-time equivalence is determined by aggregating the number of “full-time employees” (those who average 30 hours, including paid time off, per week), and the full-time equivalent number of part-time employees. If businesses share at least 80 percent common ownership, or where certain service organizations have joint activity or control, those businesses are considered a single employer.
• If you are a large employer, you may need to redefine your policies governing eligibility for health insurance. The ACA requires that large employers offer coverage to at least 95 percent of their “full-time employees.” However, many employers currently consider “full-time employment” to be 32, 35 or 40 hours per week (instead of the 30 hours required by the ACA). Some employers’ policies even exclude entire categories of W-2 employees, such as temporary or seasonal employees, or per diems, all of whom may now need to be offered coverage. Large employers who fail to comply with these rules face an annual “sledgehammer” penalty equal to $2,000 times the number of all full-time employees.