The 5 questions employers asked most about the ACA

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The 5 questions employers asked most about the ACA

Thanks to all who attended our webinar on ACA employer tools and tactics yesterday!

We appreciate Layla Taylor from Sullivan, Hayes, & Quinn offering her expert insight on the employer provisions of the law – as well as CheckWriters’ Stacey Hall demonstrating the easy functionality of our ACA Tools.

We’ve compiled the 5 most-asked questions from the webinar for you to look over. Is your top ACA question on the list?

1. What is the difference between full-time employees and Full-Time Equivalents (FTEs)?

This one can be confusing – after all, “FTE” could plausibly be used as an acronym for both full-time employee and full-time equivalent. However, for purposes of the ACA, “FTE” means “Full-Time Equivalent.” FTEs account for the hours of part-time employees, and the term is used when determining whether or not your organization is considered an “Applicable Large Employer.” You will be considered an Applicable Large Employer if you have 50 or more full-time employees – or, a combination of full-time and part-time employees that is equal to 50 or more full-time equivalents. For example, a hypothetical organization with 100 part-time employees could end up having approximately 50 FTEs, since the hours of these 100 part-time employees add up to equal 50 FTEs. This video offers a succinct summary of FTEs.

2. If I have all full-time employees who work year around, does my company have to keep track of the measurement and stability periods?

The measurement look-back period is used for employees that are not considered full-time presently or at the start of their employment. It is designed to help employers determine whether their employees who are not considered full-time may have varying hours that would, on average, be considered full-time and should therefore be offered employer-sponsored health insurance.

3. I’m a smaller employer with less than 50 employees. What parts of the ACA are applicable to me – and do I still need to provide the Notice of Exchange to my employees?

The process for determining large employer status is important for employers with less than 50 employees in order to be aware of the threshold and keep track of employee numbers, which includes both full-time and part-time employees (as touched upon in Question #1 above). Many small employers hover close to this threshold. In addition, the analysis of determining employer status may be applicable to a small employer who is part of a controlled group - which would have its employees aggregated with another member employer that is part of that controlled group.

With regard to the Notice of Exchange, all employers with employees that are covered by the Fair Labor Standards Act (FLSA) – which is virtually all employers! – are required to provide the Notice of Exchange.

4. What does the term “safe harbor method” refer to?

Under the ACA, employer-provided coverage is only considered affordable if the employee's premium contribution for self-only coverage does not exceed 9.5 percent of that employee’s household income for the tax year. Because it would be complicated – not to mention invasive – for an employer to determine employee household income, there is a "safe harbor" method that permits the employer to utilize the employee's individual W2 gross wages instead of household income to calculate affordability. Watch this video for a quick summary of safe harbor methods.

5. I have a US Treasury Department directive fact sheet indicating that the ACA employer mandate kicks in for employers with 100 or more employees in 2015, but doesn’t kick in for employers with 50 to 99 employees until 2016. Is this true?

Yes, that fact sheet is correct. Final rules published by the Treasury Department allow employers with 50 to 99 full-time employees to not be penalized until 2016 under the employer mandate.  But for employers with 100 or more full-time employees, the employer must meet the requirements under the employer mandate for 2015 or be subject to a penalty. Barring future changes to the law – which we’ll certainly keep you apprised of - in 2016 the mandate will apply to all employers with 50 or more employees.

PS: You may have missed the webinar - or you may have found it so useful that you want to watch it again! We posted a video of the webinar to our Vimeo account - click to watch.

The responses in this blog post are made available by Sullivan, Hayes & Quinn, LLC for educational purposes only and to give you general information and a general understanding of the law, not to provide specific legal advice or advice for you or your organization's specific legal situation. This post may be considered advertising in some jurisdictions under the applicable law and ethical rules. By using this blog post you understand there is no attorney-client relationship between you and Sullivan, Hayes & Quinn, LLC or any of its attorneys and none has been created. This blog post should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

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