Have You Assessed Your Potential Liability Under the Affordable Care Act?

Document created by 1050210 on Oct 23, 2014
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Published Date: 01/20/2014


Pat; Rountree

By Pat Rountree


Are you an employer with 50 or more full time and part time employees? If so, have you talked with your benefits consultant to evaluate your potential liability under the Affordable Care Act (ACA) prior to the pay or play penalties for 2015? Although it is a year away, employers with part time or variable hour employees may need to establish a measurement period now to evaluate full time equivalent employees.


Employers with 50 or more full time equivalent employees are subject to the pay or play provisions of the ACA. Full time employees as defined by the ACA are those who work 30 or more hours per week. Full time equivalent employees are determined by adding the hours of part time, variable hour and seasonal employees working less than 30 hours and dividing by 120. [Note: There are some special rules and exceptions for seasonal workers that you should review with your benefits consultant.]


Employers may evaluate full time equivalent employees by looking at the average number of hours worked each month, or using a look back measurement period of three to 12 months prior to the 2015 pay or play date. The measurement period may range from three months to 12 months with an administration period of up to 90 days prior to the pay or play date. Employees who average 30 or more hours per week during the measurement period must be covered under your plan during a stability/coverage period of not less than six months or equal to the measurement period if greater.


There are two penalties that could affect you if the employee tries to get coverage through the exchange:


  1. If you are a covered employer and a full time equivalent employee who is not covered goes to the exchange and gets a premium tax credit, you will be subject to an affordable care penalty.
  2. If your failure to assess or measure full time equivalent hours results in your offering health care coverage to less than 95 percent of your “full time” employees, you will have to pay a no coverage or shared responsibility penalty assessed on all full time employees (even those with coverage) minus 30.


Call your insurance broker now to discuss this important issue if you have not already done so. CAI cannot advise you on the appropriate measurement period for your business. However, we do want you to be aware of your potential liability and to advise you to address this now if you have not already done so.


For more information on the issue of 50 or more “full time equivalent employees,” go to http://j.mp/FT-EE.


For more information on the employer penalties, go to http://j.mp/ACA-P.