As the 2015 Employer Shared Responsibility Mandate, also known as “Play or Pay” looms ever closer, it’s important that employers of all sizes understand exactly what their duties are under the Affordable Care Act.
In general terms, Play or Pay requires certain employers to offer adequate and affordable health insurance to their full-time employees (as well as their dependents). Those who fail to comply may face substantial penalties that are levied for every month the required coverage is not offered.
But this mandate raises a lot of questions? You might wonder what criteria determines which employers are required to provide insurance, whether any other requirements apply to those who don’t have to, and how on earth you know where your business falls on that spectrum.
A recent article that appeared in Employee Benefit News answers all of these questions and several others.
What size is your company?
For starters, the 2015 mandate to provide coverage applies to large employers only. Mid-size employers don’t have to offer coverage (yet), but they do have to report.
Large employers are those with 100 or more full-time (or full-time equivalent, also known as FTE) employees. Beginning January 1, 2015, these businesses must offer qualified health benefits to all employees working an average of 30 hours per week or 130 hours per month, although some exceptions apply.
Mid-sized employers have between 50 and 99 full-time or FTE employees. They’ll have to comply beginning in 2016.
Small employers, those with 1 to 49 full-time or FTE employees, are off the hook for now.
What makes someone a full-time employee?
So, now you’re probably asking who qualifies as a full-time employee. The law defines them as any employee who, for any month, works an average of at least 30 hours per week, or a total of 130 hours for the month. This includes any of the following paid hours: vacation, holiday, sick time, paid layoff, jury duty, military duty and paid leave of absence under the Family and Medical Leave Act.
Those who aren’t considered full-time employees under the law include non W-2 leased workers, sole proprietors, partners in partnerships, real estate agents, and direct sellers.
Where it gets tricky is with employees who don’t work a set number of hours each week, or variable-hour employees. However, the general rule is that they don’t count as full-time employees unless they begin to regularly work more than 30 hours per week.
Who’s considered a dependent?
Because the law’s requirements mandate that coverage also be offered to the dependents of full-time employees, let’s go ahead and define who those are.
Under the ACA, dependents are defined as children under the age of 26. The law does not consider spouses as dependents. Coverage offered to qualifying dependents must meet minimum coverage requirements (which most carriers’ plans do anyway) and minimum values (i.e. 60{d044ab8acbff62f209a116f8142e303cb886f535b0fcf58cb82cde7cb327d3c9} of the cost of medical claims).
They must also be affordable. While there are several ways to test for this, but they all center around the figure 9.5{d044ab8acbff62f209a116f8142e303cb886f535b0fcf58cb82cde7cb327d3c9}. Meaning they can’t exceed 9.5{d044ab8acbff62f209a116f8142e303cb886f535b0fcf58cb82cde7cb327d3c9} of any of the following: the employees income per their W-2, the lowest hourly rate paid by the employer multiplied by 130 hours per month, or the federal poverty rate.
Are you in compliance with these requirements?
If you need help complying with these regulations, or just merely want to talk with someone to verify that your company meets the requirements, give Sequoyah Group a call today. Keep in mind that your requirements will only increase over the next two years, so there’s no better time to be proactive and stay on top of the changing regulations.
For more information, you can read the source article here.