The Affordable Care Act mandates that employers with more than 50 full-time workers provide health care to their employees or pay a penalty. But there are some complications, particularly when it comes to temporary workers. Understanding how the law affects your company is crucial to ensuring you are fulfilling your responsibilities. Here is a breakdown of an employer’s obligations under the ACA.
General requirements
If your company has more than 50 full-time employees, you must either provide all full-time workers with health coverage, or pay a penalty. The penalty varies but is generally $2,000 per employee per year. Companies with less than 50 full-time employees are exempt from paying any penalties. Companies must also comply with tax requirements and report both health plans and penalties to the IRS.
The ACA and part-time or temporary workers
Where a company’s obligations get complicated is when it comes to temporary or part time employees. If you have employees working on a temporary basis, here are some additional things to consider in determining your responsibilities.
How do temporary workers factor into the 50-emplyee threshold?
A company comes within the ACA if it employs at least 50 full time employees or full time equivalents. A full time employee is one who works at least 30 hours per week or 120 hours per month. The number of full time equivalents is determined by calculating the number of hours worked by non-full time workers and dividing that number by 120. For example, 6 temporary workers who each work an average of 100 hours per month would count as 5 full time equivalents (6*100/120).
Thus, employers must calculate not only the number of temporary workers but the number of hours to determine whether they come within the ACA requirements.
When does a temporary worker come within the ACA?
An employee is entitled to the benefits of ACA if they work at least 30 hours per week or 130 hours per month. Temporary workers qualify if they average 30 hours per week during the time period chosen by the employer – generally three, six, or twelve months.
What steps must employers take for employees that come within the ACA?
For employees entitled to the benefits of the ACA, employers must either provide a group health care plan or pay a penalty. For temporary workers who average less than 30 hours per week, an employer is not required to provide the employee with health care coverage. However, the employer must still keep track of the employee’s hours. If the employee applies for government health care subsidies under the ACA, the employer will be required to show that the worker has not exceeded the 30 hour threshold or it risks paying a penalty.
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