Despite a one-year delay in the effective date of the shared-responsibility provisions of the Affordable Care Act to Jan. 1, 2015, employers should begin planning now.
Employers providing group health coverage for employees should begin to assess their existing policies now to determine whether they comply with current ACA regulations and those to be enacted in 2015. If the policies do not comply, organizations must decide whether – and how – to redesign their plans to comply or formulate a plan of action if they choose not to comply.
Here’s an overview of the major areas to explore.
The employer shared-responsibility provision – commonly referred to as “play or pay” – applies to “large” employers and provides a choice to play and provide group health insurance meeting certain minimum standards or pay a tax. To avoid the tax, large employers must offer health insurance to “full-time employees” that will provide “minimum essential coverage” that is “affordable” at a “minimum value.” Employers failing to meet these new requirements, either intentionally or unintentionally, face stiff tax penalties if at least one full-time employee buys coverage through the newly created insurance exchange.
A “large” employer is one with at least 50 full-time employees. A “full-time employee” is an individual working an average of 30 or more hours a week. Working 130 hours in a calendar month is considered the monthly equivalent of 30 hours per week.
Where actual hours are not tracked, an employer may apply a days-worked equivalency, crediting an employee with eight hours for each day worked or, a weeks-work equivalency, crediting an employee with 40 hours for each week worked. Different methods for different classifications of employees may be applied as long as the classifications are reasonable and consistently applied.