The Affordable Care Act brought about many significant changes for employers, one of them being how we classify part-time workers. Beginning back in January, 2014 companies started facing the decision on whether they would “play or pay”. Play would mean adhering to the ACA guidelines in tracking variable employee hours to determine if they meet full-time equivalency (FTE) or not. If they do meet full-time status they would then need to be offered affordable health coverage under New Code § 4980H. If they fail they could face paying up to 2,000 USD per year per employee.
What qualifies an employee as full time?
A full-time employee must work an average of 30 hours per week or 130 hours per month to reach FTE status.
What counts towards reaching FTE status?
Each and every hour of service to which an employee is entitled to pay for performance of duties at work. These hours of service must also include acquired vacation, holiday, illness, incapacity, layoff, jury duty, military duty, or leave of absence hours.
What happens if a worker is misclassified?
If the Applicable Large Employer (ALE) does not accurately track and determine FTE they could receive the § 4980H penalty for breaking the 90-day waiting period limitation.
Determining a method to accurately track variable hour employees is especially important for employers who do not offer coverage to everyone. After this is established an employer must also take into account if the employee is new full-time, seasonal, variable hour or an ongoing. In general, there is a great deal of detail involved in variable hour tracking for employees. Tab Service Company has a team devoted to making sure employer data is tracked and managed correctly for ACA reporting and compliance. To learn more information on our ACA reporting and compliance services call an account representative today at (312) 527-4306.
Tab Service Company is a service bureau company that offers ACA compliance services for section 6055 reporting. Established in 1960 the company has provided organizations and businesses across the nation with Business Process Outsourcing solutions. We approach the section 6056 reporting and compliance from a holistic standpoint to include: tax consulting, data collection, electronic presentment and print/mailing/electronic filing. Call today to speak to a representative (312) 527-4306.