Know the Law: Large employers need to provide health coverage under ACA
Question: My restaurant in the Lakes Region employs hundreds of employees throughout the year with high peaks in the summer, fall and during the Christmas holidays. How do I determine which employees I have to provide health coverage to under the Affordable Care Act?
Answer: Starting in 2014, large employers (50 or more employees) must provide compliant health coverage to all full-time employees (30 or more hours per week) or pay a penalty tax.
It is essential for large employers such as yours to keep accurate records of hours worked by employees so coverage decisions can be verified if an audit occurs. Assuming you only want to offer coverage to full-time employees, IRS regulations allow you to establish a measurement period of at least six months in 2013 to determine if your existing ongoing employees worked enough hours for full-time status in 2014.
Employees that are determined to be full-time must be covered over a subsequent "stability period" that is the greater of six months or the length of the measurement period. You must provide coverage regardless of the actual hours worked during the stability period.
Employees who are not full-time, do not have to be covered during the stability period. However, you must continue to measure their hours during future measurement periods to verify that they continue to be ineligible for coverage.
New employees that you reasonably expect will average 30 hours a week must be eligible for health insurance immediately unless there is a waiting period which can last up to 90 days. If you hire new employees to work variable hours less than 30 or on a seasonal basis, you can establish a measurement period of between three and 12 months during which time coverage does not have to be offered. The subsequent stability period for those determined to be full-time must be the same length of time as the stability period for ongoing employees.
In summary, assuming you are willing to closely track and measure employees' hours, IRS regulations allow you certainty as to who must be covered.
John Rich can be reached at email@example.com.
Know the Law is a bi-weekly column sponsored by The McLane Law Firm.
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