From its very inception, the Affordable Care Act has been the cause of a great deal of confusion and misinformation. None of us will forget former Speaker of the House, Nancy Pelosi’s quote, “we have to pass the bill so that you can find out what is in it.” That was three years ago, but the fact is that there is more need for enlightenment today than there was even back then. In the state of California, employers are just seven months away from being held responsible by the State and Federal Government for complying with the intricacies of this new legislation. This is a tall task considering that applications of the law are still being decided, forms haven’t been finalized, local providers have yet to be selected etc… Middle market businesses, already strapped by the “new economy”, will particularly be scrambling to understand their requirements.
Bridgeport Benefits, a California Benefits and Administration industry leader, has pledged to help guide employers through these unchartered waters. Steve Salinas, COO of Bridgeport, says, “There are insurance providers, attorneys, and a host of other experts out there providing valuable information about the Affordable Care Act; however, the glut of information can create confusion and actually become sources of misinformation when received by those with a fundamental lack of understanding of its contents and applications. At Bridgeport, ever since Obamacare became a reality, we have focused on embracing the education that is vital to truly understanding the ramifications that this legislation has for California employers. We will be the gold standard for accurate information, good advice and guidance.” The first question that needs to be answered accurately is, “Are you a Large or Small Employer in the eyes of the IRS under the Affordable Care Act?”
Bridgeport is highly equipped to help employers answer this question with an in depth analysis. That being said, here are some of the basics that can help you understand and plan for making the determination whether or not you are considered a Large or Small Employer. While this sounds simple, it is not. The first item to consider will be when to measure the workforce population’s hours worked in order to accurately determine your coverage requirements. California is providing employers a 6 month, “look back” that can be selected at the discretion of the employer for 2013. The look-back period must be consecutive months and precede their implementation of coverage by at least 90 days. For example, a look-back period beginning April 1, 2013 must conclude by October 1, 2013. During this period employers will be determining whether or not they have 50 or more Full Time Employees OR any combination of Full Time Employees and Full Time Equivalent Employees (aka FTE’s) that push them into Large Employer Status. The bottom line is that companies with 50 or less Full Timers and FTE’s will be considered a small employer and will not have to offer affordable care; Employers that DO have 51 or more Full Timers and FTE’s WILL BE REQUIRED to EITHER a) offer affordable health care to their workforce OR b) pay the corresponding tax penalties for not offering their eligible employees affordable care. This is commonly referred to as, “pay or play” under the new Affordable Care Act. Therefore, it stands to reason that within the benefits planning process, employees roles may be reanalyzed, hours cut or raised, additional staff hired and fired, and a host of other decisions be broached in order to best suit the operations of your organization as it relates to complying with this new employee benefits requirement.
The next question that must be asked is, “What makes an employee a Full Timer AND/OR what does a Full Time Equivalent (FTE) consist of?” The short simple answers to the question are: A full Time employee is any employee that works over 30 hours per week on average. An FTE is a combination of part time employees that work 40 hours per week when you combine their average hours. (i.e. TWO part timers that work an average of 20 hours per week each will add up to ONE FTE). It should be noted that organizations with 51 FTE’s will be pushed into Large Employer Status along with employers that have 51 or more full timers or any combination thereof. There are many other ramifications and requirements once you have determined that you are a Large employer and need to, “pay or play”, but each organization and their population is different and must be analyzed on a case by case basis.
Bridgeport Benefits is your employee benefits and administration destination. We recommend that you consult with one of our specialists as soon as possible to start planning and implementing the necessary steps to ensure compliance with the Affordable Care Act. Contact us today by phone at (818) 865-6800 or by contact form by clicking here. We look forward to helping your organization meet the requirements of the Affordable Care Act, while you focus on your core business.