August 20, 2013
Effective August 1, 2013, a business website operated by the federal government expanded its coverage of the impact of the Affordable Care Act (ACA) on businesses.
As noted on the site, the situations facing employers depend on their numbers of full-time-equivalent (FTE) employees.
An “employer” may be a for-profit, nonprofit, or governmental organization. The “common law” definitions of employers and employees are to be applied.
A full-time employee is defined to be one who is employed on average throughout the year for at least 30 hours per week.
The hours worked by part-time employees are added together and the total divided by 30 hours to obtain an FTE equivalent.
The employer mandate penalty requirements under the ACA are referenced as the “employer shared responsibility provisions” of the ACA.
The term “transition relief” is used to describe postponement of the large-employer mandate until 2015.
Employers with 50 or more FTE employees will be subject to the mandate starting in 2015. This total includes both full-time and the FTE-equivalent part-time employees.
To determine the employee count, all full time employees over the previous year are first counted. Then the average hours worked by part-time employees over the previous year are added together and divided by 30 hours per week, to obtain an FTE count. The numbers of full-time and part-time FTE employees are then added together, for a total employee count.
Because of the one-year “lookback” feature, employment decisions made by businesses in 2014 will affect their situations under the ACA in 2015.
Groups of organizations that share common ownership or control are to be combined for an employee count under an “aggregation” rule.
An exception to the employer mandate is provided if the number of FTE employees is 50 or more for only 120 or fewer days in a year, due solely to seasonal workers.
Reference is made to the SHOP (Small-Business Health Options Program) portion of the Health Exchanges, under which small businesses may select a group health insurance plan for employees. Small-business employers may also be eligible for tax credits and financial assistance.
Insurance coverage must meet “minimum value standards”.
As may be noted, the procedures for counting employees and preparing reports on coverage may become quite complex for businesses as they attempt to decide how the ACA will affect them. This complexity is one of the major reasons given by the Department of Health and Human Services (HHS) for postponing implementation of the employer mandate until 2015.
More on these and related topics may be found in a recent book by the authors that describes implementation of the ACA and its impact on legal practices.
Previous installments of “Obamacare Reports” address the various ways in which implementation of the ACA is affecting legal practices: