Health Care Reform Pay or Play limitations place fines on those who do not “play” by new rules necessitating employer’s provide affordable health insurance.
As of 2015, applicable large business employers are required to offer affordable, minimum value health insurance coverage for their full time employees. Otherwise, a fee will be fined per full-time employee, or per individual who works a 30+ hour work week.
The IRS has created a look-back measurement approach to calculate an employee’s measurement period changes that would result from the following:
- an employee transferring to a new position within the same applicable large employer in a division that uses a different measurement period. Or,
- The applicable large employer changes the measurement period that is applicable to a category of employees.
These changes would necessitate the employer accurately measure these employee changes. The two methods of calculation the IRS has provided for businesses are the Monthly Measurement Method and the Look-Back Measurement Method.
Look-back measurement method applies when the standard monthly measurement does not apply. This method uses the average hours of an employee’s work week during a given measurement period to determine if they are full time or part time during the subsequent stability period, or the next period without change.
Two measurement periods result:
- Standard Measurement Period is used for ongoing employees, generally those who are employed for one full standard measurement period.
- Initial Measurement Period is used for employees with variable hours, including seasonal and part time employees.
If applicable to your business, you may use these for :
- All employees regardless of collective bargaining, salaried and hourly employees, and employees whose primary residence is in a different state.
Employers may adopt rules that make an employee eligible for coverage before they otherwise would qualify if an employee is:
- firstly, employed by an applicable large employer that uses look back, and
- secondly, if the second position is for the same applicable large business under an employer that uses a different measurement period.
When employees transfer within an applicable large employer, they retain their stability period. Those whose first position lacks a stability period who are transferring to a second position that uses a stability period can determine their full time status using the hours from the first position.
Those taking on more hours who are elevated from part time, or season, to full time of 30+ hours are eligible for applicable large employer coverage by their fourth month in the new position.
One year in a standard measurement period is required before a look back measurement can used.
Employees transferring from a non standard measurement period position to a standard measurement period position determine their full time status based on the employee’s average hours of work during the second position standard measurement period.
Employers can initiate measurement period changes if they fall under these qualifications: The “special rule” detailed in Notice 2014-49 clarifies that an applicable large business may change the measurement methods used to determine full time status if they want to:
- Switch from a look back measurement to a monthly measurement method, or vice versa
- Change the duration or start date
Each affected employee’s full time status is determined with this special rule.
Corporate transactions such as mergers and acquisitions, necessitate their own clarifications. Corporations that acquire entities using different measurement methods to determine employee full time status may become employed by the same applicable large business.
These stipulations are reliable methods by which to determined full time status until at least the end of 2016.
Employers are facing many changes due to the Affordable Care Act, and ERM Insurance is dedicated to keeping you informed about the regulations imposed on your business.
If you have any questions or concerns about Orange County group health insurance and the Affordable Care Act, contact ERM Insurance. You can reach us at (949) 222-0444.