Start Preparing Now – 2013
Employers should start preparing now for the Patient Protection and Affordable Care Act (PPACA) Employer Shared Responsibility Provisions that will take effect January 1, 2014.
Who is Subject to Employer-Shared Responsibility Provisions?
Employers that employ 50 or more full-time employees or a combination of full-time and part-time employees that equals 50 full-time equivalent employees (FTEs).
What if there are multiple companies with common ownership?
Companies that have a common owner or are otherwise related, generally are combined together for purposes of determining whether or not they employ at least 50 FTEs.
Who Must an Applicable Large Employer Offer Health Benefits To?
Employers must offer affordable health insurance coverage which includes Essential Health Benefits (EHB) to full-time employees and their dependents to avoid a tax penalty. The penalty is triggered when an employee purchases their own health insurance in the exchange and is eligible for a subsidy.
What Constitutes a Full-Time Employee under PPACA?
Under section 4980H(c)(4), a full-time employee is someone employed an average of at least 30 hours of service per week.
What Constitutes a Part-Time Employee under PPACA?
While the Notice of Proposed Rule Making issued on this topic does not define a part-time employee, it is likely a part-time employee is anyone who does not fall under the full-time designation. It is possible that employers use designations other than part-time for purposes of defining employees who are not full-time. Part-time employees are included in the calculation to determine whether an employer will be required to offer health insurance starting January 1, 2014, as described below.
Per Diem or Non-Hourly Employees?
Per diem or non-hourly employees will be counted as full-time or part-time depending on the average hours of service worked either in the previous month or during the look-back period chosen by the employer. If the employee’s per diem rate is based on an hourly rate, the employer should use the actual number of hours of service worked. If the per diem rate is based on a non-hourly basis, the employer is permitted to use one of the three methods detailed below in the non-hourly hours of service rates.
How Does an Employer Calculate the Number of Full-Time Equivalent Employees?
To determine “applicable large employer” status, an employer must:
Are Hours of Service Computed Differently for Hourly and Non-Hourly Employees?
If an Employer Has 50 or More FTEs, Does Coverage Have to be Offered to All Employees?
What Type of Coverage Must an Employer Provide?
How Will an Employer Know if Offered Coverage is Affordable?
Is There Any Transition Relief Available?
Reeva Simon Rivkin, RHU, HIP, President, Rivkin Insurance Services; CA LicOB12353
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* The views expressed do not necessarily reflect the official policy, position, or opinions of Rivkin Insurance Services. This update is provided for informational purposes. Consult with a licensed accountant or attorney regarding any legal / tax matters discussed herein.