Determining Full-Time Employees under the Affordable Care Act

Transcription

1 December 2013 Determining Full-Time Employees under the Affordable Care Act Information for Businesses Employing 50 Employees or More Harrisonburg, VA Phone: (800) Fax: (540)

2 Disclaimer This is not a political presentation, this is a policy presentation. All information in the presentation is subject to change. This presentation is geared towards businesses with 50 or more employees. The information provided should not be considered legal or tax advice. Please do not be offended if your question is answered with, We don t know. More information is being disseminated every day from the regulatory bodies and the insurance companies. Questions: Submit questions. Will answer as many questions as possible at end of presentation. Thanks in advance for your attention and your interest in attending. About our Presenter. Judy Griffith, Esq. is an ERISA and employee benefits attorney with over 20 years experience working in the industry. During this time, she has worked for an insurance carrier, PPO Network, and a regional employee benefits consultant. She is an expert in the Affordable Care Act and all other laws that relate to employee health and welfare benefits. About our Presenter.

3 Shared Responsibility Employers with 50 or more FT plus FTE must Offer coverage to at least 95% of full-time employees or Pay a penalty for failure to offer coverage (penalty delayed until 2015). Penalty is $2,000/year per employee after the first 30 employees. If ANY full-time employee gets subsidized coverage from the Exchange. (KEGEL KELIN ALMY & LORD LLP) Determining 50+ Employees Reminders Count employees of related employers Subsidiary Sister company Count full-time equivalent employees Final count is made for an entire calendar year and applies to the next calendar year Not sure about 2015 NOTE: If full-time equivalents bring the employee count to over 50, employer must comply with Shared Responsibility but may have well under 50 FT employees. Employees Use common law definition of employee Control the employees work Paid through payroll Do not include independent contractors So who are the FT Employees? Salaried employees Hourly employees working a set schedule that never varies Hourly employees who do not have a set schedule (work different hours each week) Hourly employees hired to work less than 30 hours, but who also fill in during vacations or work overtime Seasonal employees

4 First Look at Ongoing Employees Salaried Employees - Salaried Employees with a 30 or more hour work week are FT employees. Actual hours worked Days work equivalency (8 hours for each day worked) Weeks worked equivalency (40 hours for each week worked) - Can use different tests for different classes of employees as long as the classes are reasonable and consistently applied - Potential problem salaried employee working less than 8 hours a day Hourly Regularly Scheduled Employees Hourly Employees who are scheduled to work 30 or more hours or are reasonably expected to work 30 or more hours are FT employees. Hourly Employees who are scheduled to work less than 30 hours per week and never work more than that are not considered FT employees Hourly Variable, Hourly with Over-Time and Seasonal Employees These employees are the ones that do not clearly work more or less than 30 hours per week on average or only work for part of the year Some weeks they may work more Some weeks they may work less Regulations define how to determine if they are full-time Can no longer use old methods Hourly Variable or Over-Time Employees Use Standard Measurement Period to determine if full-time - Between 3-12 months Set stability period that is at least as long as the measurement period - Between 6-12 months Can use an administrative period that is no longer than 90 days - Must overlap with the prior stability period

5 How to Determine which Periods to Use This is not an exact science Will depend on many factors: - Goals of the company - Seasonality of business - Ease of collecting data - Other Start dates will depend on Plan Year and Length of time needed for Administrative Period Can use different set of periods based on the following (length and/or start and end dates): - Collectively bargained (by contract) and non-collectively bargained - Salaried and hourly - Employees employed in different states Setting the Measurement Period Employer can set the Measurement Period, but calculate hours based on the payroll periods that encompass the Measurement Period. For example Measurement Period is January October - Can use data from payroll period that begins before January 1 and ends after October 31 Testing Test annually during the administrative period for all employees who were employed during the Standard Measurement Period Do not need to test anyone who is reasonably expected to work 30 or more hours per week and is eligible for coverage. However, be careful about discrimination if you are covering someone who is not eligible For Shared Responsibility provisions, as long as the person is eligible it doesn t matter how many hours he/she works. Annual Testing Hours counted: All hours for which an the employee is paid or entitled to payment, including: - Vacation - Illness - Disability - Leave of Absence - Jury Duty - Military Duty - Layoff Do not include hours worked outside of the United States

6 Annual Testing (cont) Add up the hours paid each week for each employee and divide by the number of weeks in the Measurement Period - If the result is 30 or more, then the employee is considered full-time and must be offered coverage during the entire following stability period (regardless of any change in hours worked) - If the result is less than 30, then the employee should not be offered coverage and cannot be offered coverage during the stability period (even if the employees hours or position change) Then Look at New Employees New Employees Salaried employees Hourly employees working a set schedule that never varies Hourly employees who do not have a set schedule (work different hours each week) Hourly employees hired to work less than 30 hours, but who also fill in during vacations or work over-time Seasonal employees The test periods just explained can be used for new employees to determine whether they will be considered full-time employees. Salaried Employees Salaried Employees who are hired to work a 30 or more hour work week (or are reasonably expected to do so) must be considered FT employees. These employees must be eligible for coverage no later than the 90th day of employment Hourly Regularly Scheduled Employees Hourly Employees who are reasonably expected to work 30 or more hours are FT employees. - Must be eligible for coverage by the 90th day of employment Hourly Employees who are reasonably expected to work less than 30 hours per week and never work more than that do not have to be considered FT employees (though you may want to test) Hourly Variable, Hourly with Over-Time and Seasonal Employees These employees are the ones that are hired without a set schedule or with a schedule that is intended to vary based on employee and employer needs. Regulations define how to determine if they are full-time Can no longer use old methods

7 Hourly Variable or Over-Time Employees Use Initial Measurement Period to determine if full-time - Between 3-12 months - Each employee has the same initial measurement period - Can start anywhere between the date of hire and the first day of the next month Set Stability Period that is at least as long as the measurement period - Between 6-12 months - Cannot be more than one month longer than the Initial Measurement Period Use an Administrative Period for that employee that is not longer than 90 days (subject to rules that will be discussed) Can change Standard Measurement, Administrative and Stability Period each year How to Determine which Periods to Use This is not an exact science, but easier than the determination of the Standard Measurement Period Will depend on many factors: - Goals of the company - Seasonality of business - Ease of collecting data Can use different set of periods based on the following (length and/or start and end dates): - Collectively bargained (by contract) and non-collectively bargained - Salaried and hourly - Employees employed in different states Additional Rules Combined length of Initial Measurement Period and corresponding Administrative Period cannot go beyond the last day of the first calendar month beginning on or after the employees first anniversary Example: Employee hired March 15th 2015, must be offered coverage by April 30th 2016 If employer starts the Initial Measurement Period on April 1st 2016 and uses a 12 month period ending March 31st this allows for a one month Administrative Period

8 Testing Add up the hours paid each week for each new employee and divide by the number of weeks in the Initial Measurement Period - If the result is 30 or more, then the employee is considered full-time - If the result is less than 30, then the employee should not be offered coverage NOTE: Each employee will be handled separately Example If the new employee is determined to NOT be FT, but is considered FT during the next or overlapping Standard Measurement Period, the employee must begin being treated as a FT employee at the beginning of the Stability Period that follows the Standard Measurement Period If the new employee is determined to be FT, but not considered FT during the next or overlapping Standard Measurement Period, then the new employee must be offered coverage until the end of the Initial Stability Period Employee Hired Initial Measurement Initial Initial Stability Initial Stability Period Starts Measurement Period Starts Period Ends Period Ends March 15, 2015 April 1, 2015 March 31, 2016 May 1, 2016 April 30, 2017 Standard Measurement Period January - October Standard Stability Period begins 1/1 If the employee is determined to NOT be FT during the Initial Measurement Period, but IS determined to be FT during the Standard Measurement Period, coverage must be offered on 1/1 If the employee IS determined to be FT during the Initial Measurement Period, but NOT FT during the Standard Measurement Period, he/she can maintain the coverage until April 30, 2017 Annual Testing Hours counted: All hours for which an the employee is paid or entitled to payment, including: - Vacation - Illness - Disability - Leave of Absence - Jury Duty - Military Duty - Layoff Do not include hours worked outside of the United States

9 Special Situations Hours counted for employees of educational organization Exclude employment break period summer break (no more than 501 hours) Average hours over the rest of the year Apply that average to the weeks of special unpaid leave Recalculate the average Employees on Special Unpaid Leave FMLA, USERRA, Jury Duty Exclude period of special unpaid leave Average hours over the rest of the year Apply that average to the weeks of special unpaid leave Recalculate the average Employees rehired after Break in Service Must have a break in service of at least 26 consecutive weeks to be considered to have terminated employment and been rehired. Can use a shorter break period (at least 4 consecutive weeks) to consider person rehired but that period must be longer than the period of employment For example, - employee is hired to work over the summer average of 35 hours per week for 3 months (June, July, August) - Employee leaves at the end of August and is rehired in November - Break period is less than employment period, so must consider it as a continuation of employment - If employee is rehired in January, the break period is longer than the period of employment so can treat the employee as a new hire. Preparing for 2015 Time to Prepare! Although the shared responsibility provisions of the ACA will not take effect until 2015, now is the time to: Set measurement and administrative periods. Determine who is a full-time employee. Document these determinations.