Health Care Reform Update: Determining Full-Time Employees - ACTION MAY BE REQUIRED BY JULY 1, 2013

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To avoid potential federal penalties under the Patient Protection and Affordable Care Act (“PPACA”), applicable large employers (50+ full-time employees) must offer health coverage to all full-time employees as of January 1, 2014.
Who are your “full-time” employees?
For coverage purposes, PPACA defines full-time employees as those employees who work an average of at least 30 hours per week. Proposed regulations under PPACA provide a safe harbor look-back method for determining whether an employee is “full time.” This safe harbor requires the use of a “measurement period” of at least 3 months, but no more than 12 months, during which the employee’s hours are tracked (either on an hourly basis, or using permitted equivalencies). If an employee is found to work an average of at least 30 hours per week during the measurement period, the employee must be offered coverage during a “stability period,” which must be as long as the measurement period, but no shorter than 6 months. Between the measurement period and the stability period, an employer may use an “administrative period” of up to 90 days to identify and enroll full-time employees.
Employers that intend to utilize the safe harbor look-back method for coverage beginning January 1, 2014, must begin their  measurement periods during 2013.  The proposed regulations provide a special transition rule for 2013.  Specifically, if an employer intends to use a 12-month stability period which begins in 2014, it may use an “abbreviated” measurement period  that (1) runs at least 6 months but less than 12 months, (2) begins on or before July 1, 2013, and (3) ends no more than 90 days before the first day of the plan year that begins on or after January 1, 2014.   For example, an employer that offers a calendar year plan year and intends to use a 12-month stability period beginning on January 1, 2014, will have to begin a 6-month measurement period no later than July 1, 2013. 
Employers that want to use an administrative period to identify and enroll full-time employees should begin their measurement period as soon as possible in order to accommodate the administrative period.  For example, an employer that offers a calendar year plan year and intends to use a 12-month stability period beginning on January 1, 2014, may use a 6-month measurement period that runs from June 1, 2013, through November 30, 2013, and an administrative period that runs from December 1, 2013, through December 31, 2013

 

Topics:  Affordable Care Act, Employer Group Health Plans, Full-Time Employees, Healthcare, Safe Harbors

Published In: Health Updates, Insurance Updates, Labor & Employment Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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