As we move into the health insurance renewal and enrollment season, make sure you know where you stand.
Under the Affordable Care Act, employers with 50 to 99 employees must offer affordable coverage in 2016 or face a penalty (larger companies had to do this starting this year). The rules for determining whether you are such an employer and the type of coverage that must be offered to avoid a penalty are complicated.
I’ll try to provide some clarity, although the following is only a limited treatment of the subject. I’ll also give you resources where you can learn more.
Your staffing in 2015 determines whether you are an applicable large employer (ALE) for 2016. You are considered an ALE for 2016 if, in 2015, you have at least 50 full-time employees and/or full-time equivalent (FTEs) employees. Thus, you may employ several part-timers whose hours are added together for the month and divided by 120 to arrive at the number of FTEs. If the number does not come out even, round down to the next whole number
Example: You have three part-timers who each work 75 hours a month. Their total hours (225) are divided by 120. Because 1.875 (225 ÷ 120) is not a whole number, round down so that these part-timers are considered to be one FTE.
If you own (and control) more than one business, take employees from all such businesses into account for ALE purposes. Seasonal workers can be excluded from the count to a certain extent, so if you take on help during the holiday season, this may not necessarily put you over the 50-employee limit.
Note: While part-timers are taken into account in figuring whether you are an ALE, if you are one, you don’t have to offer them health coverage. Of course, you can choose to do so.
Coverage to avoid penalties
If you are an ALE in 2016, you won’t be penalized if you offer affordable minimum essential health coverage to at least 95% of your full-time employees and their dependents (in 2015, no penalty applied if coverage was offered to at least 70% of employees and dependents), provided no employee enrolled individually in the government’s marketplace and received the premium tax credit. Again, while part-timers are counted for ALE purposes, an ALE doesn’t have to offer them health coverage.
If you are an ALE in 2015 (including those with 50-99 employees that have penalty relief until 2016), you must furnish employees with Form 1094-C, Employer-Provided Health Offer and Coverage. Like W-2s, these forms must be given to employees by the end of January, but because January 31, 2016, is on a Sunday, you have until February 1, 2016, to furnish the forms to employees.
- ACA Information Center for ALEs
- Questions and Answers on Employer Shared Responsibility Provisions
- Reporting Tips for Large Employers
Still confused? Consider looking for a PPACA designation of an insurance agent, broker or consultant, which shows that the person you’re dealing with has been certified by the National Association of Health Underwriters (NAHU).