How To Prepare For ACA Compliance
When reviewing all of the regulations for the ACA, it becomes clear that many businesses will be minimally affected by the disdainful tasks involved with ACA compliance.
No Comply Zone
Business with less than 50 Full Time or Full Time Equivalent employees do not have to participate in the ACA mandate. That means no measuring, no testing, no compliance, no ACA involvement, period. If an employer has 28 total employees, they do not have to worry about the ACA. It’s that simple. If you employ less than 50 total people, the math is easy…<50 = NO.
Businesses who employ over 50 people – and all of them are standard office 9-5ers – will hardly be affected by the ACA. Most businesses in this category already offer health coverage. Since all employees are full time, Measurement Periods are NOT NECESSARY (yippee!). These employers must still file both the 1094-C and 1095-C just to make sure they are compliant.
A few changes may surface, such as double-checking that the plans are not costing employees too much out of pocket – the maximum allowable contribution is 9.5% of their annual salary. Also, it may be necessary to make sure the plan provides enough coverage, referred to as “minimum value coverage”. This is defined by the plan’s ability to cover at least 60% of a person’s total medical spending. (e.g. if a plan covers 50% of a hospital stay, they do not fit the bill).
However, it is the job of the insurance companies to ensure that their lowest plans still provide minimum value. An employer’s agent will be able to do the fact-checking and offer plans that are appropriate.
Who Will Have The Most To Prepare For The ACA?
Businesses with a lot of part time workers, particularly businesses that are one entity with many different locations AND a lot of part time employees will have a fair amount of work when adapting to the ACA. These businesses must track and monitor every employee’s hours at each individual location during the Measurement Period. Even if a person works 10 hours a week and there is no way they could qualify for coverage, their hours still need to be measured to combine with other part time employees in order to calculate the number of FTEs (full time equivalents) employed by the business.
Once the FTEs are determined, if the business qualifies for following the ACA mandate, they will have to comply and file. This means they will continuously have to track hours monthly to show that all of their employees remain below the threshold of 30 hours per week and therefore do not receive insurance.
Similarly, seasonal businesses will be faced with a tough tracking task. Seasonal businesses might have full time employees for only part of the year (for example a restaurant in a resort area), or even a large influx of part time employees for a few months (e.g. a retail store during the holiday season).
To solve this conundrum, the ACA has determined that businesses who tip over the 50 employee minimum strictly because of seasonal workers would not be considered an ALE and not have to adhere to ACA mandate. If a summer ice cream shop has 36 employees all year and 55 employees for 3 months during the summer, they are not subject to ACA adherence. Businesses with seasonal employees for less than 6 months of the year are equally exempt from counting those seasonal workers toward the total number of FTEs. Employers with seasonal workers for more than 6 months do have to track and count those employees’ hours (up to 120 per month) to determine their contribution to the total number of FTEs.
Is this confusing? It probably will be until businesses actually start the tasks. As new information comes to light and more clarity is found among some of the top questions and problems, we will be sure to keep our clients well-informed.
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