Affordable Care Act Compliance

Effective Workforce Management Reporting More Important than Ever

Determining an employee’s status for the requirements of the Affordable Care Act can be challenging, especially for service organizations with part time employees whose hours fluctuate. With high turnover and employee hours varying throughout the year, many organizations may not really know which employees are “full-time” if the organization relies on paper timesheets or ineffective time and attendance systems.

Service organizations with employees whose hours vary or who employ seasonal workers need to review the full‐time employee rules to avoid potential costly penalties. An employer has some flexibility to determine the full‐time workforce and can mitigate the impact (and possible confusion) that may ensue if an employee’s hours fluctuate above and below the 30-hour per week full‐time benchmark. In general, the rules allow an employer to “look back” at an employee’s hours over a specified measurement time period to determine full‐time status (average 30 hours of service per week during this period) and to assume the same “status” will apply for a designated future stability time period.

  • Organizations must maintain and to be able to analyze accurate time and attendance records to determine which employees work under or over 30 hours per week on average

An employer will not be subject to a penalty when a newly hired full‐time employee is not offered coverage while they are in the process of satisfying the plan’s waiting period.

  • Organizations need to be able to easily and quickly identify which new hires are approaching or have reached the qualifying period

The full-time employee safe harbor rules introduce new terminology that is important for employers to understand:

Initial Measurement Period (IMP): Period of time selected by the employer that is between 3 and 12 months from the date of hire to measure completed hours of service for newly hired hourly and seasonal employees to determine whether an employee completed an average of 30 hours of service per week during this time period.

Standard Measurement Period (SMP): Period of time selected by the employer that is between 3 and 12 months to determine each ongoing employee’s continuing full‐time status. The employer may select the months in which the SMP begins and ends and must consistently apply the SMP on a uniform basis for all employees in the same category. Employers may use different SMPs for these employment classifications — hourly and salaried employees, collectively and non‐collectively bargained employees, employees of different entities, and employees located in different states.

Ongoing Employee: An individual employed for at least one complete SMP.

Stability Period (SP): Period of at least 6 consecutive calendar months that is no shorter in duration than the SMP and begins after the SMP and any applicable Administrative Period for an employee determined to be a full‐time employee during the SMP.

Administrative Period (AP): Time between the SMP and the SP to determine which ongoing employees are eligible for coverage. The AP may not reduce or lengthen the measurement or stability period and may only last up to 90 days following the SMP.

Healthcare Coverage: An employer will not be assessed a penalty if the coverage offered to an employee is affordable (an employee is not required to pay more than 9.5% of wages for self‐only coverage for the lowest cost option made available by the employer) based on the employee’s W‐2 taxable wages reported in Box 1. This determination is made after the end of the calendar year on an employee‐by‐employee basis. However, an employer could use this affordability safe harbor to design a contribution strategy on a prospective basis to help avoid penalties.