ACA Easy as 1, 2, 3
ACA Compliance Simplified
From an employer’s perspective, accurate employee classification is at the crux of being Affordable Care Act (ACA) compliant. Proper employee classification can be a challenge, particularly in the hospitality industry where employers have a mix of hourly, temporary, part-time, seasonal and full time employees.
How to keep it all straight?! Don’t worry, ACA is as easy as 1,2,3!
Well, what it boils down to, and what the IRS is most interested in is: Is an employee eligible for coverage? If an employee is hired with the expectation that he or she will be working 30 or more hours per week, then yes, the employee will be eligible for coverage, regardless if they are salary or hourly.
If an employee is hired with the expectation that he or she will be working less than 30 hours per week, then no, the employee won’t be eligible for coverage.
These two scenarios make it seem so easy! What happens, though, if an employee is hired on the basis of working inconsistent hours with an unknown length of service? Well, then determining coverage eligibility can be more complex, but there are rules in place.
When situations like this occur, employers may deem these employees as variable hour by using the Lookback Method.
With the Lookback Method, an employer can set up a timeframe between 3-12 months to measure an employee’s hours. If over that period the employee averages 30 hours or more per week then coverage needs to be offered. This method works well if an employer has a large employee base continually fluctuating over and under the 30 hour per week threshold.
While determining employee eligibility can be complex, as the ACA has evolved, so has the vendor community to support employers with accomplishing their goals.
If you have more questions about being ACA compliant, reach out to an Assurance team member.
- Change is Coming- 2016 ACA Predictions
- 2016 ACA Playbook
- Compliance Support Page
- 2016 ACA Reporting Requirements Webinar Replay
- Human Resources E-Book
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