affordable care act compliance guide · employee considered full-time for future periods. • only...

AFFORDABLE CARE ACTCOMPLIANCE GUIDE(A.K.A. YOUR GUIDE TO ACA SUCCESS)

A C A C O M P L I A N C E G U I D E

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L E G A L D I S C L A I M E RACA Compliance, Publications and Content

The ACA Compliance Guide is intended to be used as a handbook for the reader to reference in conjunction with, but not

exclusive of, official regulatory information. The laws, regulations, rulings and other material contained herein may change

over time, and the reader should seek out the most current materials. This guide does not include everything that you need to

know. We strongly encourage you to read and understand all laws and regulations that are applicable for ACA compliance and

to follow them closely.

We present this guide for informational purposes only. The information in the ACA Compliance Guide should not be relied

upon or construed as legal advice or legal opinion. It is not an offer to represent you, nor is it intended to create an attor-

ney-client or other confidential, advisory relationship. The content of any Internet e-mail sent to us or any of our personnel will

not create an attorney-client relationship or other confidential, advisory relationship, and will not be treated as confidential.

You should not rely upon the information presented in the ACA Compliance Guide to make legal or other professional decisions

without seeking personal advice from an attorney or other professional.

We are not responsible for the content of any third-party website or information referenced within the guide. If any such third

party site violates any laws or ethical rules of your jurisdiction, we are not available to represent you. End users may view and

use the content of this guide for personal use. All other uses are prohibited. The ACA Compliance Guide does not offer any

guaranteed compliance with any law. By using the ACA Compliance Guide as a point of reference, the user takes full responsi-

bility for meeting the requirements of ACA and indemnifies us from any claims that arise from its use.

CO N T E N T S

ACA

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T H E PAT I E N T P R OT E C T I O N A N D

A F F O R DA B L E C A R E AC T (P PAC A )

A N D W H AT YO U N E E D TO K N OW

A C A S E T S M I N I M U M CO V E R A G E S TA N D A R D S F O R

H E A LT H C A R E I N S U R A N C E P L A N S A N D R E Q U I R E S A L L

I N D I V I D U A L S T O E N R O L L I N A P L A N O R PAY A P E N A LT Y.

T H I S ‘ P L AY O R PAY ’ O P T I O N I S K N O W N A S T H E S H A R E D

R E S P O N S I B I L I T Y M A N D AT E . E M P L OY E R S A L S O H AV E

A S H A R E D R E S P O N S I B I L I T Y M A N D AT E , M A K I N G

C A R E F U L T I M E K E E P I N G A N D

S C H E D U L I N G E S S E N T I A L .

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W H Y AC A I SM A N DATO RY

ACA defines 10 categories of

service that all healthcare plans

must cover. The stated goal is to

extend essential healthcare to all

individuals. Shared responsibility

is mandated to help cover costs.

Every health plan must cover: • Ambulatory patient services • Emergency services • Hospitalization • Pregnancy, maternity, and newborn care • Mental health and substance use disorder services


• Prescription drugs• Rehabilitative and habilitative services and devices• Laboratory services• Preventive and wellness services and chronic disease management• Pediatric services

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I N D I V I D UA L R E S P O N S I B I L I T Y A N D O P T I O N S

Individuals can obtain insurance

through their employer, an exchange,

or a qualified program such as

Medicare or Medicaid. Alternatively,

they can pay an annual penalty or

request a hardship exemption.



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D I D YO U K N OW ?

Almost half of all individuals get healthcare

coverage through their employer.

Em

ployer

49%

20%14%

9%

7% 2%

MedicaidMedicare

Uninsured

Non-GroupOther Public

CLICK HERE TO SEE YOUR STATE BREAKDOWN

Source:Kaiser Family Foundation estimates based on the Census Bureau’s March 2014, March 2015, and March 2016 Current Population Survey (CPS: Annual Social and Economic Supplements).7

https://goo.gl/lSy4o6

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E M P LOY E R R E S P O N S I B I L I T I E S A N D O P T I O N S

Pay attention to staffing levels.


Rules are based on total

<50 FTEFull-Time Equivalent (FTE) WORKERS EACH MONTH

may be eligible for a tax credit

50+ FTE for the month —subject to shared responsibilities for month

50+ FTE for prior year (average) —subject to shared responsibilities for month

FTE

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O P T I M I Z I N G AC A CO M P L I A N C E E F F O R T S A S A N E M P LOY E R

Control schedules and track hours by

employees daily. Detailed timekeeping

and scheduling help employers forecast

costs, even in organizations with

seasonal or cyclical work.


Compliance begins with establishing the total

1. TFTEMPLOYEES EACH MONTHTo do this, employers must know total:

Full-time employees – defined as workingat least 30 hours/week or 130 hours/month

2. PTH Part-time employees – Total hours worked

FTE = TFT + (PTH/120)for any given month

FTE

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D E T E R M I N I N G W H E T H E R A N E M P LOY E E I S F U L L-T I M E


Employers have 3 options for determining whether a new hire is full-time according to ACA

DESIGNATION

Classify the employee

as full-time at time of

hire.

MONTHLY MEASUREMENT

Count hours at end of each

calendar month.

• 130 hours during the month

is full-time that month

• Detailed timekeeping is a

must

LOOK BACK MEASUREMENT

Use measurement periods to establish whether

employee considered full-time for future periods.

• Only available when it is not possible to determine at

time of hire whether employee will work 30 hrs/wk

• 4 different measurement periods used in determining

status

• 30 hours/wk during the month or at least 130 hours

during month is full-time that month

• For employees not paid hourly, employer can calculate

based on hours worked, days worked equivalent (at

least 1 hr/day) or weeks worked (at least 1 hr/week)

• Detailed timekeeping is a must1 0

Add up all hours worked

by part-time employees

during the month and

divide by 120.

ROUND the result down

to the nearest whole

number. If the result is less

than one, however, round up

to one (1) FTE. In this exam-

ple, 4.16 rounds down to 4.

500

4.16÷ 120

For Example: 3 part-timers

x 110 hrs/mo + 2 part-timers

x 85 hrs/mo = 500 hours ÷

120 = 4.16

This is easy if you are using

a timekeeping system.

Add your result to the number

of full-time employees

Calculating Your Monthly FTE (Full-Time Equivalent)

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4+20=24

FTE

EEs FTE

=20 FT5 PT 24

Check eligibility for tax credit

based on four criteria.

• <25 FTE

• paid average <$50,000

(indexed annually)

• paid 50% or more of

health insurance

premium

• purchased coverage

through SHOP

marketplace

In this example, an employer

with 20 full-time employees

and 5 part-time employees

working less than 30 hrs/week

for a total FTE of 24 might

qualify for the tax credit.

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YES

NO

NO

NO

YES

Penalties and Incentives forEmployers Under ACA During 2017

Start Here

NO

YES

YES

YES

NO

Did the employer have at least

50 full-time equivalent employees

in the previous year?

Penalties do not apply to employers

with fewer than 50 full-time

equivalent employees.

If the employer has <25 full-time

employees with average annual wages of

about $50,000 or less and covers at least

50% of full-time employees’ premium

costs, the employer may be eligible for a

health insurance tax credit to purchase

coverage through the SHOP Marketplace.

*A dependent child is defined as a child of an employee who is under the age of 26. Employers do not face a penalty under the ACA if they do not offer coverage to the spouse of a full-time employee.

**Affordability is determined by reference to the taxpayer’s household income (i.e., the employee’s required contribution for self-only coverage should not exceed 9.69%). Since employers generally do not know the worker’s household income, to determine if

an employer may be subject to penalty, the employer can measure 9.5% against three separate safe harbor amounts (the worker’s Form W-2 wages, the worker’s hourly rate of pay as of the first day of the coverage period, or the federal poverty line for a single

individual). Note that a worker’s and a the worker’s dependents eligibility for premium tax credits or costing sharing subsidies are based on family income; not the safe harbor amounts. Source: Henry J. Kaiser Family Foundation, KFF.org.

NICE!

YIKES!

Does the employer offer health

insurance coverage to at least 95% of

its full-time workers and their

dependent children*?

Did at least one full-time employee

receive a premium tax credit or

cost-sharing subsidy in the federal or

state marketplace?


receive a premium tax credit to help

pay for coverage in a Marketplace?

The employer must pay a

penalty for not offering coverage

that is affordable and provides

minimum value.

The employer must pay a

penalty for not offering coverage.


receive a premium tax credit to help

pay for coverage in a Marketplace?

Does the insurance pay for at least

60% of the covered health care

expenses for a standard population

(called minimum value)?

Do any employees have to pay more

than the 9.69% of their household

income** for the employer coverage

(called affordable coverage)?

There is no penalty

payment required

for the employer

The penalty for each month the employer

fails to offer coverage is $2,260 divided by

12, multiply the number of full-time

employees (minus up to 30).

The penalty for each month is $3,390

divided by 12, for each full-time employee

receiving a premium tax credit that month

(up to a maximum of $2,260 divided by

12, multiply the number of full-time

employees (minus up to 30)).

YIKES!

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AC A R E P O R T I N G R E Q U I R E M E N T S Employers with 50 or more FTE employees must complete a 1095-C: Employer-Provided Health

Insurance Offer and Coverage form for each full-time employee and distribute to them annually.

A 1094-C: Transmittal of Employer-Provided Health Insurance Offer and Coverage Information

Returns form and all 1095-Cs must be submitted to the IRS.

W-2 Reporting Requirements

In addition, employers that filed 250 or more W-2s the prior year must include the cost of

employer-sponsored health coverage on the current year W-2s. This includes employer

and employee contributions.

For more information on W-2 filing requirements, visit

T H I S L I N K H E R E

https://www.irs.gov/affordable-care-act/form-w-2-reporting-of-employer-sponsored-health-coverage

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W H E R E TO B E G I N

Proactively manage your workforce time and attendance.

Schedule part-time employees to maximize hours.

Automatically calculate actual FTE for prior periods and

forecast FTE for upcoming periods. Run reports that

identify full-time status and FTE fraction by employee.

P U T A T I M E K E E P I N G

A N D S C H E D U L I N G

S Y S T E M I N

P L AC E TO T R AC K

E M P LOY E E DATA

A N D H O U R S .

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U N D E R S TA N D I N G M E A S U R E M E N T P E R I O D S

C A N G E T A L I T T L E CO M P L I C AT E D, A N D

E M P LOY E R S W H O A R E S U B J E C T TO T H E

M A N DAT E S H O U L D S E E K P R O F E S S I O N A L

L E G A L A DV I C E . F O R M O R E I N F O R M AT I O N

P L E A S E G O TO :

T H I S L I N K H E R E


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http://1.usa.gov/1qR6Nyb


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O U R WO R K F O R C E M A N AG E M E N T S U I T EI N C L U D E D F E AT U R E S T H AT S U P P O R T A C A CO M P L I A N C E

ACA

Employee data (title, gender, date of hire, term date, EE ID, etc.)

Track hours worked

Auditable reporting

Work Week and Work Month reports (calculation of employee status reports)

Employee status (FT, PT)

Staffing and schedule management

Communication/collaboration via email & text

Dashboard— accrued & total overtime hours

Timekeeping data records

Hours’ threshold indicator and alerts

Time card approvals

Finalized pay period (lock-down data)

Employee groups

Time card audit

Manageable, editable time cards (with audit trail)

Alert indicators (overtime, max hours, etc.)

Daily Auto Email report (view OT, missing punches, total hours)

Schedule Preferences

Proactive Time Management

Forecasting of hours

Mobile Access (Punch IN/OUT, tracking hours for off-site employees)

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L E T U S H E L P YO U I M P L E M E N T O U R

WO R K F O R C E M A N AG E M E N T S U I T E

We’re ready to help you get the peace of mind you’re looking for and deserve.

Call your workforce management solutions providerTo learn how we can help with ACA compliance.

Disclaimer: The ACA reporting requirements provided are subject to change. See page 2.

For more information follow these links:

http://go.cms.gov/1V7bz6F

http://1.usa.gov/1Vu6NPC

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http://go.cms.gov/1V7bz6F

http://1.usa.gov/1Vu6NPC

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