Reference Guide: Employer Mandate Revisions

 

Previous

Mandates

Newest

Mandates

What time frame is used to determine the size of an employer? To determine the size of an employer, refer to a consecutive 12 month period To determine the size of an employer, refer to a consecutive 6 month period
When will an employer be subject to the compliance of the employer mandate? All mid and large size employers must comply to the employer mandate by January 1, 2015. An employer will be subject to the employer mandate, given the final revisions, at the time their plan year begins in 2015 for large employers and 2016 for mid-size employers.
What methods are allowed to determine affordable healthcare coverage? Safe harbors permit employers to use W-2 forms, hourly wages, and the poverty line to determine affordability Previous methods remain, however, as clarification, full W-2 wages must be used, which include any employee salary reductions contributed to 401(k) or cafeteria plans.
How do employers determine full-time employee eligibilty? A full-time, eligible employee is anyone who works at least 30 hours per week in the previous year. Previous methods remain, however, clarification revisions were made. Volunteer workers, seasonal workers, and students in work-study programs are NOT considered full-time. Adjunct faculty must be credited 21/4 hours per week for each hour of teaching and 1 hour per week for each additional hour of out-of-classroom work to determine status. No other revisions were made addressing short term employees or those in high-turnover positions.
In the case of a rehire, how does coverage apply? If you rehire an employee to work full-time, they must be offered coverage within 90 days of hire. If the rehire is to work variable hours and their return is within 26 weeks of their departure, the employer must offer coverage within 90 days and continue to cover the employee until the end of the standard plan year. However, they will also immediately start on a new employee measurement period, which if not satisfied by the time open enrollment ends for the next plan year, the employer does NOT need to extend coverage for that year. All previous requirement remain, EXCEPT, if the rehire is to work variable hours and their return is within 13 weeks of their departure, the employer must offer coverage within 90 days and continue to cover the employee until the end of the standard plan year.

 

pdf_downloadReference Guide_Employer Mandate Revisions

 

 

Pay it or Play it: Preparation Not Procrastination

All employers with 50 or more full-time employees will need to make a decision in January 2015 whether they are going to “pay or play.” Preparing now can be crucial to ensuring you make the right decision for your organization and avoid unwelcome surprises come 2015. As you make your decision, take a careful look at these three key areas:

 

1.) Affordability:

Health coverage is affordable from an employer when an employee’s premiums do not exceed 9.5% of the employee’s a.) W-2 Form, wages from that employer, b.) monthly wages equal to the hourly rate of pay X 130 hours or the employee’s monthly salary, or c.) the federal poverty line for a single individual.

These premiums are those paid on a minimum value, lowest cost coverage plan. To qualify as minimum value, a plan must pay at least 60% of the total allowed costs stated under the plan. Employers can use 3 methods to determine minimum value:

1.) IRS generated minimum value calculator,
2.) Safe Harbor Checklist,
3.) Actuarial certification.

2.) Full-time status:

Many tax penalties will occur because of the lack of quality systems that clearly differentiate eligible from ineligible employees. A full-time, eligible employee is anyone who works at least 30 hours per week in the previous year. Therefore, employee hours in 2014 will affect how much liability your company will face once the employer mandate takes effect next year. Benefits Lawyer, Peter Marathas, says that “employers should be working with payroll and HRIS vendor now to create systems that will flag hours employees work and maintain them in a form that will be suitable for use to prove to the government” (ebn, 2014).

3.) Non-discrimination:

Double checking eligibility can benefit both you and your employees. Employers can use a standard measurement period (SMP) between 3-12 months for ongoing employees in order to define full-time status based on hours worked during that period. On going employees are those which have been employed for at least one complete SMP and have worked an average of 3o hours per week during the stability period. The stability period, subsequent to the SMP and usually the same length, must be at least 6 months long and no shorter than the SMP. Employers can vary the SMP as long as the changes are consistent for all employees under the same category of employment. For example, if an employee is determined a full-time employee during an SMP of 6 months, then he/she must be treated as full-time for the duration of the next 6 months (stability period) even if they work less than the required 30 hours per week.

**Hint: Remember, even if you are part of controlled group with another company, both of the companies are combined to determine if they collectively qualify as a large employer. If so, both of you would be subject to the pay-or-play penalties. However, any tax penalty amount will be individually issued and assessed.

Still having trouble deciding whether paying or playing is right for your company? The following questions can help you start thinking about certain ramifications of both the paying and playing decision.

Pay_or_Play_decision_making