LI businesses prepare to comply with Affordable Care Act
Medium-sized employers this month got another one-year reprieve on a central requirement of the Affordable Care Act.
Employers with 50 to 99 full-time workers now have until 2016 to comply with the law's requirement to provide affordable health coverage or pay a penalty.
Larger firms -- those with 100 or more full-time employees -- got a smaller break. They had been required to offer coverage to 95 percent of their full-time employees by 2015; now, they must offer coverage to 70 percent in 2015, and 95 percent in 2016. Companies can be fined $2,000 per full-time employee for failing to comply.
More than 90 percent of larger companies already offer health insurance to their workers, according to government estimates. But among the ACA's requirements, the coverage offered must qualify as "affordable."
If an employee's share of the premium costs for employee-only coverage is more than 9.5 percent of his or her yearly household income, the coverage is not considered affordable.
Whether a company has 50, 100 or 1,000 employees, the delayed requirements are not a reprieve from planning and preparation
Larger companies, especially, need to make sure they're properly identifying and classifying employees eligible for coverage, as well as tracking hours of employees who work variable schedules, to ensure they're in compliance come 2015.
"They still should be looking at their workforce now," advises Dawn Davidson Drantch, in-house counsel for Alcott HR, a Farmingdale-based professional employer organization.
"For a company our size, the parameters are the same," says Cat Graham, vice president of human resources at Woodbury-based Clever Devices, which designs technology solutions for the transit industry and employs about 200 on Long Island. "We're staying our course."
Clever Devices already offers health coverage to its workers, and has been working with R.J. Rossiter Consulting Group in Woodbury for help with ACA compliance.
"Everything still has to be looked at," notes Rob Rossiter, whose firm specializes in employee benefits, financial services and ACA compliance.
Rossiter reviewed Clever Devices' payroll and benefit data for the past year and compiled it into an ACA "report card" that lays out the different levels of compliance and where the company stands in each area, Graham says.
"Clever Devices wants to make sure we're in compliance," she notes. About 15 percent of the firm's employees work variable hours.
Generally, an employee would be considered full time under the ACA if he or she worked at least 30 hours per week or 130 hours in a month, Rossiter explains. That definition could potentially change to 40 hours under pending legislation in Congress, Drantch says.
Employers subject to the mandate must institute a measurement period for determining full-time status of variable-hour employees, says Rossiter.
The measurement period for tracking hours can span from three to 12 months, says Todd Praisner, president of Tango Health in Austin, Texas, which provides ACA compliance software. Most employers are choosing a 12-month measurement period that coincides with their insurance plan year, Drantch notes.
The measurement period would be followed by an administrative period of up to 90 days to assess employee eligibility and enroll those eligible employees in a plan, Rossiter says. Then there's a subsequent "stability" period that dictates the length of time an employee must be covered, even if his or her hours change, Praisner notes.
And employers regardless of size must make sure they're not misclassifying as independent contractors workers who should be classified as employees, Drantch says. This will affect your count and who's offered coverage.
"No one HR person can possibly know all the complexities themselves," says Graham, noting the benefit of using an outside adviser.
Nearly half of U.S. companies are reluctant to hire full-time employees because of the Affordable Care Act.
Source: Duke University/CFO Magazine Global Business Outlook Survey