The Affordable Care Act (ACA) added employer shared responsibility provisions under section 4980H of the IRS. What does this mean for you, the employer? Let’s break this down and simplify what can oftentimes seem overwhelming.
Basics of Employer Shared Responsibility
The 4980H provision states that certain employers (referred to as ALEs, or applicable large employers) have the following requirements:
– Employer must offer health coverage that is affordable and that provides minimum value to their full-time employees along with their dependents.
– If the above is not met, the employer potentially could be responsible for making an employer shared responsibility payment to the IRS if at least one of your full-time employees receives a premium tax credit for purchasing individual coverage through the marketplace/exchange.
What Employers Are Subject To ALE / Employer Shared Responsibility
ALE is defined as “Applicable Large Employer”. ALEs generally have 50 or more employees including full-time employees and full-time “equivalent” employees. Full-time equivalent is a combination of part-time employees that count as 1 or more full-time based on hours worked. For example, 2 part-time employees working 15 hours per week each is equivalent to 1 full-time employee (30 hours).
A few exceptions to this rule are seasonal workers and those with Tricare/VA Coverage. You do not need to count seasonal workers (those who work less than 120 days) or those who have coverage under Tricare or a VA health program.
Determining If You Are An ALE Employer
The IRS has provided very detailed information and guidance when trying to calculate your employee count for ALE status. They also have provided a few calculation examples to further clarify calculations.
IMPORTANT NOTE: There is an employer aggregation rule! If a company owner has other companies they own or share ownership in, they may need to combine employee counts across all companies to determine ALE status.
If You’re An ALE, Now What?
The quick response is, you may be responsible for the following:
- Adhering to federal FMLA Requirements
- Adhering to state “Paid Leave” (state of Washington, 25+ employees)
- Providing COBRA options to employees who leave (20+ employees)
- Filing ACA reporting at the beginning of each year
HR Resource, Inc. is here to help you navigate all the state and federal requirements associated with ALEs. We can help you determine your ALE status, provide insurance quotes for the proper employee sizing and navigate benefit requirements when employees go on leave.
Have Insurance Questions? We Have Answers!
If you need assistance with your employee benefits, reach out to our team today! Email us here or give us a call (360) 668-1999. Located in Snohomish, WA and have been servicing local employers for over 30 years!
Insurance can be confusing, but we’re here to make it easy on you! Reach out any time from more information on small group health insurance and large group health insurance.
