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EMPLOYER SHAREDRESPONSIBILITY

Methods of Identifying Full-Time Employees


WELCOME

Employer Shared Responsibility : Methods for IdentifyingFull-Time Employees


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WelcomeCompliance Webinar

To connect to sound, simply click on the “Voice/Video” button in the top left,and follow the prompts to test the audio only.

You can download session handouts by clacking on the “handout” icon at theupper right side of the tool bar.

PC headset or speakers are required for audio. There is no phone dial in.


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Housekeeping

ØThis session is designed for Comprehensive Services clients whohave Workforce NowØAll lines have been muted to avoid distractions during the sessionØQuestions can be asked throughout the presentation via the Q&A

panel at the top of your screenØHandout materials are located in the “Handouts” sectionØThe demonstration is best viewed in Full Screen Mode – Select F5

keyØThis session is being recorded


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Disclaimer

This presentation is NOT:v Legal advicev A political opinionv The final word of healthcare reform


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Webinar Facilitators

üErin Howard – ACA Compliance AnalystüWendye Rice – ACA Compliance AnalystüSteve Taylor – ACA Compliance Analyst


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Learning Outcomes

After this webinar participants will be able to:ØDefine Monthly Measurement MethodØDefine Look-Back Measurement MethodØUnderstand Best Practices for Measuring EmployeesØEvaluate the Measurement Method Appropriate for

their organization


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Employer Shared Responsibility

Beginning in 2015:ØCertain employers, known as “Applicable Large

Employers” (ALEs) will be subject to Employer SharedResponsibility provisions under section 4980H of theInternal Revenue Code


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Applicable Large Employers (ALEs)

Have combined total of 50 or more:Ø full-time employees andØ full-time equivalent employees

• NOTE: Transition relief states that employers with between 50and 99 full-time and full-time equivalent employees will not besubject to IRS Shared Responsibility penalties in 2015

=> 50


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ALEs & Shared Responsibility


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Review of 4980H Penalties

Ø If an applicable large employer with 50 or more full-time employees (who doesn’tqualify for transition relief) does not offer minimum essential coverage (MEC) to atleast 70 percent of its full-time employees and their dependents in 2015, and atleast one full-time employee receives a premium tax credit through a healthinsurance exchange, the employer may be assessed an annual penalty of $2,000per full-time employee above the first 30 full-time employees.

Ø If an applicable large employer with 50 or more full-time employees (who doesn’tqualify for transition relief) does offer MEC to at least 70 percent of its full-timeemployees and their dependents in 2015, but at least one of the full-timeemployees obtains a premium tax credit through a health insurance exchange, theemployer may be subject to a penalty of $3,000 for each non-covered full-timeemployee who receives a premium tax credit. However, the penalty cannot exceedthe penalty that would be assessed for not offering any health coverage.

http://www.paychex.com/health-reform/esr/minimum-essential-coverage.aspx


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Ø If an applicable large employer with 50 or more full-time employees (whodoesn’t qualify for transition relief) offers health coverage in 2015 that providesMEC but it is determined to be either: 1) unaffordable or 2) doesn't meet theminimum value and at least one full-time employee whose coverage wasdeemed to be unaffordable or lacked minimum value receives a premium taxcredit through a health insurance exchange, then the employer may be fined$3,000 for each employee in that circumstance receiving a premium tax credit.The penalty cannot exceed the penalty that would be assessed for not offeringany health coverage.

Review of 4980H Penalties


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Full-Time & Part-time Status Defined

Ø Full-time employees average:§ 30 or more hours of service per week§ 130 or more hours of service per month

Ø Part-time employees average less than:§ 30 hours of service per week§ 130 hours of service per month


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Other Common Employee Categories

Variable Hour Employee:Ø Is an employee with respect to

whom it is unclear whether he orshe will work a set number of hoursper week.

Seasonal Employee:Ø Is an employee hired for 6 months

( 120 days) or less annually.Ø Can be excluded from the ALE

count if they have worked lessthan 4 months annually and theemployer exceeds 50 FTE for 120days or fewer when these workersare employed.

Ø Should be included in the ALEcount if works more than 4months annually.


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Other Common Employee Categories

Contractor:Ø If the payer has the right to control

or direct the results of workperformed but not what and how itwill be done.

Ø Not a contractor if servicesperformed can be controlled by theemployer.

Temporary Employee:Ø Fill short-term position that is not

expected to last more than one yearor meet an employment need thatis scheduled to be terminated withinone or more years for reasons suchas the completion of a specificproject or peak workload

Ø Fill positions that involveintermittent (irregular) or seasonal(recurring annually) workschedules.


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Approaches to Determining Full-Time Status

The ACA permits two methods of measuring variablehour employees to determine status:

Ø Monthly Measurement Method

Ø Look-Back Measurement Method


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Monthly Measurement Method

Ø Under the Monthly Measurement Method, full-time employeesare identified based on the hours of service for each calendarmonth

Ø Employers must track employees on a monthly basis todetermine eligibility and to determine exposure to the employermandate penalty

Ø A variable-hour employee will be considered full-time if they arecredited with 130 or more hours of service in a calendar month


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Application of Monthly Measurement Method

ØAdopting the Monthly Measurement Period may havesignificant administrative consequences to employers andemployees§ Evaluation of all variable hour employees must be completed on

a monthly basis§ Employees may become eligible or ineligible for coverage on a

monthly basis§ Frequent changes in status may cause increased COBRA

qualifying event activity


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Look-Back Measurement Method

Ø Under the look-back measurement method, employers may determinethe status of an employee as a full-time employee during a futureperiod, based upon the hours of service in a prior period

Ø Using this method, the employer determines each ongoing employee’sfull-time status by looking back at hours of service in standardmeasurement period


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If ….An employer decides to use thelook-back approach

…. Then …..They will need to establish their:Ø Measurement periodØ Administrative periodØ Stability Period


These periods may differ for certain categories of employees:Ø Union / non-unionØ Salaried / hourly employeesØ Employees in different states


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ØMeasurement Period

ØAdministrative Period

ØStability Period


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Look-Back Measurement Periods

MEASUREMENT PERIOD:ØEmployer tracks hours of service for their variable hour

employees over a standard period of time from 3-12months in length to determine their full-time status.Ø Initial Measurement Period- A measurement period for

new hires, which is based upon the date of hire, or thefirst day of the following month.Ø Standard Measurement Period – A measurement

period for ongoing (existing) employees.


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Look-back Measurement Periods

ADMINISTRATIVE PERIODØBegins at the end of the Measurement PeriodØEmployer determines who qualified as FT and may need to

be offered coverageØEmployer offers coverage and completes enrollmentsØCan be up to 90 days in lengthOptional (recommended as an ADP best practice)


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STABILITY PERIODØEmployer must offer coverage to employees determined to

have full-time status during the preceding measurementperiod, or pay a penalty

ØMinimum of 6 months, and can be:§ no shorter than the corresponding Measurement

Period, and§ no longer than the corresponding Measurement

Period if an employee’s status is not Full-Time

Look-back Measurement Periods


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MeasurementPeriod

• Standard period of time from 3-12 months in length used to measureemployees hours to determine if they will be considered full-time employees.

AdministrativePeriod

• Optional period of time up to 90 days in duration occurring between theMeasurement Period and the Stability Period that allows time for determiningemployees’ ACA Benefit Status and enrolling those employees who qualify asbenefit eligible

Stability Period

• Period of time that is the same length as the measurement period but notshorter than 6 months, during which time an employer must offer coverage tofull-time employees, or potentially pay a penalty.


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Application of Look-Back Measurement Method

ØEmployers with a large variable hour workforce favor thelook-back measurement method§ Reduced administrative activities throughout the year for

ongoing employees§ Ability to average hours of service to flatten any peaks

or valleys based on ebb and flow of business§ Flexibility to monitor hours of service over longer

periods of time before making a benefit offering decision


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Look-Back Measurement Example

12months

2months

12months

MeasurementPeriod

AdministrativePeriod

StabilityPeriod


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Measurement Period

12 months

November 1 - October 31

AdminPeriod

2 mos

Stability Period

12 months

January 1 - December 31

Note: Administrative period coincides with Annual Enrollment toreduce administrative burden


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12 Month Measurement Period, 2 Month Administrative Period, 12 Month Stability PeriodMeasurement Period

12 monthsNovember 1, 2013 -

October 31, 2014Admin2 mos

Stability Period12 months

January 1, 2015 - December31, 2015

Measurement Period12 months

November 1, 2014 - October31, 2015

Admin

2 mos


January 1, 2016 -December 31, 2016


November 1, 2015 -October 31, 2016

Admin

2mos


January 1, 2017 - December31, 2017


November 1, 2016 -October 31, 2017

Admin2

mos


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ADP Resources


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ACA Look-Back Worksheets

ØLook-Back Worksheet Summary§ Summarizes data for each employee across the entire

Measurement Period§ Useful if employer needs the average number of hours for each

employee to determine the ACA Benefit Status

ØLook-Back Worksheet Detail§ Provides data for each employee by pay period§ Useful for completing additional research on someone’s status, or

to validate the calculation in the summary worksheet


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ACA Look-Back Worksheet (Summary)To run the ACA Look-Back Summary Worksheet:ØV2: Reports > Custom Reports > Run > All

Standard/SampleØWFN Current Version: Reports > Custom Reports >

Sample Reports

Ø Before running the worksheet, enter the number of months in themeasurement period (3-12) and the end date of the measurementperiod (MM/DD/YYYY)


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ACA Look-Back Worksheet Summary Sample


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ACA Look-Back Worksheet (Detail)

To run the ACA Look-Back Detail Worksheet:ØV2: Reports > Custom Reports > Run > All

Standard/SampleØWFN Current Version: Reports > Custom Reports >

Sample Reports

Ø Before running the worksheet, enter the number of months inthe measurement period (3-12) and the end date of themeasurement period (MM/DD/YYYY)


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ACA Look-Back Worksheet Detail Sample


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ACA Fields for WFN V2/HRB

HR/Benefits: Employee>Work(edit)


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ACA Look-Back Method Settings (WFN Current Version Only)


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ACA Dashboard (WFN Current Version ONLY)


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Q & A


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Learning Outcomes

After this webinar you will:ØDefine Monthly Measurement MethodØDefine Look-Back Measurement MethodØUnderstand Best Practices for Measurement MethodsØEvaluate the Measurement Method Appropriate for their

organization


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Employer Shared Responsibility:Methods for Identifying Full-TimeEmployees

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