The impact of the Patient Protection and Affordable Care Act is only beginning to be felt by large U.S. companies. In a client alert, Dilworth Paxson partner Matthew Whitehorn and associate Richard Smolen advise employers with big employee rosters about the math they need to do to avoid potential Obamacare fines.
Whitehorn and Smolen say beginning Jan. 1, 2015, significant “play or pay” ACA penalties may be assessed against employers with 100 or more full-time employees. The penalties apply if the company fails to provide affordable and minimum-value coverage to qualified employees and their dependents, causing the employee to instead purchase coverage from a health insurance exchange and receive a tax credit or cost-sharing subsidy.
Generally speaking, an employee is considered full time if he/she works at least 30 hours per week. In 2015, the lawyers say, the ACA’s transitional guidance allows companies to determine employee status by using a six-consecutive-month “look-back” period that begins no later than July 1 and ends no earlier than 90 days before the first day of the 2015 plan year.
In order to use this method, Whitehorn and Smolen say companies should have begun keeping close track of employee hours as of April 2, to give them six months to gather records and use the allotted 90-day administrative period to figure out who qualifies for insurance before 2015.