Slideshow 10 ACA issues employers need information on

  • June 03 2014, 10:46am EDT
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1. Who qualifies as age 26 dependents?

Spouses, foster children, stepchildren and non-U.S. citizens are not included as dependents under the rule that many employers now must cover dependents up to the age of 26. Certain adopted children, however, are considered dependents. A child is considered a dependent for the entire calendar month that he or she turns age 26, according to Groom Law Group.

2. The look-back measurement method

An employer must count employees using the same method for all employees in a given category. The look-back period, according to Groom, “involves averaging the number of hours worked by the employee over the measurement period.” The employee categories are: Salaried employees and hourly employees, employees “whose primary places of employment are in different states,” collectively and non-collectively bargained employees and “each group of collectively bargained employees covered by a separate collective bargaining agreement.”

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3. Monthly measurement method

If the look-back method is not used, an employer can use the monthly measurement method, according to Groom. This means that “employees must be identified based on hours of service for each calendar month. Groom says it appears the IRS intends for this to be used to calculate liabilities because it is time contingent (an employer must wait until the end of the month).

4. Controlled groups

Groom says that the final shared employer responsibility rules provide that if one large employer member of a controlled group — companies with similar ownership — offers coverage for a month it “is treated as an offer of coverage by all large employer members for that month.” However, the large employer member definition is vague and advisers may need to seek additional guidance for their clients here, according to Groom.

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5. Third-party offers of coverage

If a professional employer organization, other employer organization or staffing firm offers coverage on the employer’s behalf to employees, “it is treated as an offer of coverage made by the client employer,” Groom says. Because there are requirements around the fee an employer must pay to the third-party, Groom says “it would be prudent for employers to specify in staffing agreements that a portion of the fee being paid to the staffing firm is for health coverage.”

6. Employee orientation period and waiting period rules

Groom says the orientation period for a new employee must not exceed one month. After that, there’s a waiting period — a time “that must pass before coverage for an individual who is otherwise eligible to enroll under the terms of a group health plan can become effective” — that must not exceed 90 days for an employer to offer coverage. Advisers should be aware that “employers must also comply with the rule that coverage be effective by the first day of the calendar month following a period of three full calendar months in which the full-time employee began employment.”

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7. Cumulative hours of service requirement

This requirement cannot exceed 1,200 hours but still must be met within 90 days or the employer could face penalties, according to Groom Law Group and the final employer shared responsibility regulations. Benefit advisers should be sure to check clients’ cumulative hours of service agreement for compliance and ensure that if an employee does not meet the hours within 90 days, they’re still offered coverage.

8. Reporting to employees

Groom says a large employer is one that employs an average of 50 or more full-time employees or full-time equivalents in the calendar year that just passed and they must “file the section 6056 form and furnish a copy to each full-time employee.” Self-funded employers, insurers, government agencies and several others must file the 6055 form and “furnish a copy to each responsible individual,” which includes the employee, primary on the plan, former employee, etc.

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9. Fitting within safe harbor

There are two areas of “transition relief” in the final employer shared responsibility regulations. First, Groom says, there’s the “good faith standard for 2015 penalty relief,” in which there will be no penalties for optional 2014 reporting and no penalties for incorrect or incomplete 2015 filings of 6055 or 6056 if a good faith effort is deemed. Also, there’s a form of simplified reporting for 2015 for 6056 forms but not 6055 forms, so be sure to read up on the rules to determine employer applicability.

10. Fitting within permanent safe harbors

There are some other alternatives to reporting for employers that must comply with 6056 of the ACA. The first involves certification of qualifying offers along with the offer of minimum essential coverage to the employee’s spouse and dependents. Advisers should be well-versed in this clause to determine if the conditions are met, Groom says.