ACA
The Affordable Care Act (ACA), sometimes also known as the Patient Protection and Affordable Care Act (PPACA), and otherwise known as 'Obamacare' greatly expanded health insurance regulations and Medicaid/Medi-Cal. Large employers that, generally speaking, have 50 or more full time employees must offer ACA compliant and affordable health insurance.
Determine Group Size
If Group Size is 50 or more, then “affordable” group health insurance must be offered.
If Group Size is less than 50, then group health insurance does not have to be offered.
If Group Size is less than 50, then group health insurance does not have to be offered.
- FT employees are defined as working at least 30 hours per week, or 130 hours per month on average.
- All PT employee's hours must be aggregated to determine FTE (Full Time Equivalent)
- Include FT and FTE calculations from commonly owned companies.
- Use this link to determine FTE:
- https://www.healthcare.gov/shop-calculators-fte/
- Group Size equals FT plus FTE.
- Contact Sonoma Valley Insurance for a calculator to help determine Group Size.
Determine Affordability
If employer groups of less than 50 employees choose to offer health insurance, it must be 'affordable'.
- For 2018, health insurance is considered 'affordable' if the employee-only premium (net of employer contribution) of the lowest-cost plan offered does not exceed 9.56% of the employee's income.
- W-2 Method: Coverage costs for the employee only are no more than 9.56% of current year wages according to Box 1 of their W-2.
- Rate of Pay - Paid Hourly: Coverage costs for the employee only are no more than 9.56% of their hourly rate of pay x 130 hours per month.
- Rate of Pay - Paid by Salary: Coverage costs for the employee only are no more than 9.56% of their salary per month.
- Federal Poverty Level (FPL): Coverage costs for the employee only are no more than 9.56% of the most recently published mainland FPL for a household of one.
Employee Reimbursement for Health Insurance
Employers offering health insurance must pay a minimum of 50% of the employee only premium for the least expensive plan offered.
- Employers must not pay an employee's Individual health plan they may have purchased themselves.
- Paying the premium directly as a business expense will trigger very large penalties.
- Avoid penalties: Bonus the employee to cover the expense. Must go through payroll and WC.
Employee Waiting Period
- Must not exceed 90 days
- Practically speaking, a new hire's coverage day should be no later than the 1st of the month following 60 days. Bona fide Orientation Periods may extend the waiting period by 30 days.
- Shorter wait times are permissible.
- Best practice: request a quote for the new hire's benefits the day they are hired.
Full Time Employee Definition
Employees working 30 hours per week or 130 hours per month on average are considered Full Time and must be offered benefits to either enroll in or waive off.
- Don't change employees to 1099 contractors to avoid the coverage mandate.