The ACA Gears are Churning

Time to change ACA gears

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The July 4th weekend marked more than our nation’s anniversary of freedom, it marked less than 6 months to another ACA installation date. 

As most of you are aware, the ACA postponed the original “installment” date of the Employer Mandate portion and cut it into 2 portions.  Those companies with more than 100 “Full Time Equivalent” (FTE) employees had to offer compliant plans on January 1 of 2015 or accrue monthly tax penalties for each employee not offered a compliant plan after eighty. 

January 1, 2016 marks the other installment of the Employer Mandate taking the number down to 50 FTE or accrue monthly tax penalties for each employee not offered a compliant plan after 30.

Six months in the employee benefits timeline is not a long time.  However, there are a few serious issues that must be addressed with this installation.  The one we will tackle today is offering to eligible employees.

For 2015, employers must offer to 70% of eligible employees a compliant plan. 

  • If an employer offers a plan but fails to offer it to 70% of those eligible in a timely fashion then they are penalized as if they did not offer a plan.

  • This 30% margin gives employers time to implement and track safe harbor rules as well as install software tracking systems.

  • Many (if not most) payroll systems or companies offer some upgraded program or patch to track the hours and status of new and existing employees, generate the data to report, or file the necessary reports for you (This of course is one of the many onerous duties thrust upon HR departments and company management).

2015 has been a year of adjusting to when to file what collected data. 

The good news is that there is an error zone of up to 30% of eligible employees

The bad news is that in 2016 it changes from 30% to 5%. 

Companies will have to offer their compliant plans to 95% of eligible employees in a timely fashion or they will face the tax man.

In your traditional company model of 200 employees and turnover of 7% of employees, the tracking of 14 new employees and offering coverage is relatively simple.  We assume these new employees are hired on as full time employees and offered coverage to be effective not later than 90 days or first of  month following 60 days. In this model, there are few moving parts and all the parts are easily defined for tracking.

However, if you look at some retail, staffing or hospitality companies you find a very different model.  That company of 200 employees has to track full time, variable hour, part-time, seasonal and contract workers.  In this model there may be 50 full time employees and the rest fall into part-time and variable hour.  Part-time has to be tracked to see if they pass the threshold of 30 hours a week and become full-time.  In a staffing company these 150 employees can be full time, variable hour, seasonal or contract depending upon contract.  Plus in the staffing model they might have 75-80% turnover every 90 days. 

Tracking data now has a greater importance because it is easier to miss when someone becomes eligible or not get them paperwork in an acceptable time.  Large tax penalties are motivation for efficiency.  So, having a clear understanding of who is eligible and when they are eligible can make or break a company.

The other portion of tackling the ACA mandate is plan designs, but to keep things short and sweet, we will tackle that in another post shortly.

We are working with several different companies in offering benefit programs that meet part A & B of the Employer Mandate with a stronger cost effective MEC plan to meet part A and the individual mandate at little cost to the employer.  Our Minimum Value offering will include a high deductible type plan and a copay type high deductible plan.  We are offering these plans with rates based upon demographics or “easy” underwriting.  We are also able to augment your offering with buy up options that might require additional underwriting.  While the final rates are based upon the final enrollments we are able to get quotes for you now based upon your current eligible population.

We are now at T-5 ½ months to implementation.

I am available for consultation on plan offerings and developing a strategy for your company’s situation.   We have multiple carriers and networks of providers available as well as enrollment demarcations.   Please give us a call or email at 770.338.0188 or glennd@choicebenefitsgrp.com

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