Came across this helpful post on the headcount-accounting rules for providing healthcare coverage under the Patient Protection and Affordable Care Act.
The post, courtesy of the Society for Human Resource Management (subscription required), makes note — with links provided — of two recent releases you should know about. One is a Jan. 2 publication in the Federal Register by the Internal Revenue Service of its proposed “Shared Responsibility for Employers Regarding Health Coverage,” with guidance on complying with the requirement that large employers provide affordable healthcare coverage under the act. The other is the IRS’s online post of questions and answers regarding those “shared responsibility” provisions.
What’s essential to note here, according to the release, is the healthcare mandate’s application “to employers with 50 or more full-time employees or a combination of full-time and part-time employees that is equivalent to at least 50 full-time employees.” Granted, this sounds like it affects smaller employers more than large ones, but it needs to be worked into all headcount calculations, and large employers choosing to opt out of healthcare-plan provisions need to know what they’re getting into.
To quote the release:
… large employers that do not offer coverage to their full-time employees face a penalty of $2,000 times the total number of full-time employees if at least one employee receives a tax credit to purchase coverage through a state-based health insurance exchange established under the PPACA.
If large employers do offer coverage to their full-time employees and their dependents but the coverage is “unaffordable” to certain employees or does not provide minimum value, the employers face a penalty of $3,000 times the number of full-time employees receiving tax credits for exchange coverage (not to exceed $2,000 times the total number of full-time employees).
Here’s the general mandate behind those calucations, according to the release:
Employers with 50 or more full-time employees (including full-time equivalents) must offer all employees working an average of 30 hours per week or more in a month healthcare coverage with “minimum value,” beginning in 2014, or pay penalties.
In other words, although large employers are not required to provide healthcare coverage to part-time employees working less than 30 hours per week, these part-time employees are included in calculating the threshold number of 50 workers (including full-time equivalents) that would require employers to offer affordable coverage to all full-time employees.
It gets even more involved:
As explained in the new Q&As, because under the PPACA a full-time employee is an individual employed on average at least 30 hours per week, half-time would be 15 hours per week, and 100 half-time employees would equal 50 full-time employees. In another example given in the Q&As, 40 full-time employees employed 30 or more hours per week on average plus 20 half-time employees employed 15 hours per week on average are equivalent to 50 full-time employees.
In addition to spelling out more details on how FTEs are to be calculated under the new law, the release includes specifics on other types of employees, such as seasonal workers and transition relief.
Obviously, as with all aspects of the ACA, you should be conferring with your legal and benefits consultants first and foremost.
Given the intricacies of these FTE calculations, it might behoove you to confer with some mathmeticians and accountants as well.