Another update from the Jungle….
The ACA is alive and kicking. That means employers must comply with the ACA when offering a group health plan to their employees. Unfortunately, about 30% of employers have no idea what is required of them, according to a recent insurance industry survey. Consider Tony’s situation.
Tony runs a company with about 30 full-time employees who work in the office. His company also has 80 part-time employees who work at various jobsites as needed. Tony has never offered health coverage to the part-timers because it was not financially feasible. Besides many of his part-timers wanted cash and not health coverage while others had health coverage from another source, often a spouse’s employer’s coverage.
Tony recently woke up to the fact that he must include his part-time employees in the headcount to decide if his company is a large employer subject to the employer penalty. A quick estimate that two part-timers equal one full-time employee means that Tony’s workforce is clearly over the 50 employee line at which the employer penalty begins to apply.
What should Tony do next?
- He can decide to continue his current practice of not offering coverage to the part-timers. He may calculate that any penalty he owes for not offering them coverage is less than the cost of covering them in the group health plan.
- He can decide to offer coverage to his part-timers. If they reject his company’s group health plan, he will not owe the employer penalty.
- Before he chooses either of the above options, he can talk to a consultant who can explain the steps his company needs to take to comply with the ACA. Armed with this information, he can make a business decision on what is financially best for his company.
The above scenario is a composite of actual situations faced by clients. In those situations, the clients chose to offer health coverage to their part-timers because it was financially feasible and it boosted employee morale (after employees learned there is an individual penalty for not having health insurance). If you’re confused by the ACA, Corporate Compliance Risk Advisor can help your company understand its obligations and make informed decisions on ACA compliance.
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