The countdown is on for the ACA Employer Mandate
The Affordable Care Act (ACA) is law. And, for employers with 100 or more full time equivalent employees (FTE), the employer mandate is scheduled to take effect on January 1, 2015. With the deadline for compliance pushed out until January 2015, some organizations may still think they have time. Not true, the pressure is on — and the extra time must be used to take a more thoughtful and strategic approach to ACA compliance.
By now most organizations know the fundamentals of the ACA employer mandate. As it stands now, as of January 1, 2015, businesses with 100 or more FTEs are required to offer health insurance coverage or pay a penalty. The coverage must be adequate and affordable. Adequate coverage means that the share of the total allowed costs that the plan is expected to cover is at least 60% of healthcare costs. Affordable means that coverage cannot cost more than 9.5% of the employee's annual household income. While safe harbors exist, if the benefits are inadequate or not affordable, an organization could be subject to a penalty of up to $3,000 per occurrence.
Is 30 the new 40?
In an industry faced with high-turnover, balancing increasing healthcare benefit costs with staff satisfaction will impact most providers in some way. ACA will no doubt impact the long-term care industry. One of the many areas of concern is how the ACA employer mandate classifies FTE. For purposes of this law, FTE is classified as an employee with at least 30 hours of service per week or 130 hours of service per month. With part-time and episodic working characteristics, employees in long-term care are working on average 32.6 hours per week. If 30 is now the new 40, many providers will be facing a new group of healthcare benefit eligible employees.
Where to begin?
Determining which of your employees qualify as full-time under ACA is job one. Many long-term care providers have already started to conduct their “look-back” monitoring to see how many hours employees have worked over the selected look-back period. Likewise, all employers must be sure that workers are classified correctly and that there is a clear record of hours worked. To do this accurately, you'll need the right tools that allow you to effectively monitor and manage your workforce hours and schedules. And when it comes to the ACA, employer's mandate administration, spreadsheets, home-grown reports, and manual calculations will do little to simplify a highly complex process with potentially significant financial consequences.
The right tool is an integrated workforce management solution, which provides complete automation and high-quality information for driving cost-effective labor decisions and minimizing ACA compliance risk. Organizations will need to track, integrate, and analyze data across various functions including, timekeeping, scheduling, human resources (HR), and labor analytics.
Kronos offers a single, integrated solution, which can help employers manage ACA compliance and associated costs by:
- Providing accurate information about average hours worked by full-time and part-time employees to comply with ACA regulations;
- Facilitating timely analysis of employee benefit eligibility, thus improving compliance and reducing financial penalties;
- Monitoring and analyzing your workforce schedules, time records, and benefits enrollment in real time; and
- Delivering comprehensive auditing and reporting features that will permit you to provide evidence of your ACA compliance efforts to government agencies.
Go to the source
ACA is highly complex and much more involved than the space permitted in this blog. Given its ever changing nature, I recommend going straight to the sources responsible for administering and auditing employer compliance: www.irs.gov, www.healthcare.gov and www.dol.gov/ebsa/healthreform. For more information about Kronos solutions, visit http://www.kronos.com/affordablecareact.aspx.
Carol Ballou is the senior manager, healthcare practice group, Kronos Incorporated.