The biggest development that has occurred since ACA or Obamacare was passed in 2010, is the announcement by the Department of Treasury that it will delay enforcement of the ACA mandate requiring large employers (50 or more full time equivalent employees) to offer health insurance to their employees or face a penalty. This "Employer Shared Responsibility" mandate was supposed to go into effect on January 1, 2014, and has now been delayed until 2015. The delay also applies to the proposed reporting requirements that insurers and employers were to follow. This is huge! The logic is that it gives the government more time to prepare for the requirements of this provision, such as implementation of payroll system changes for counting hours to determine eligibility for coverage, or the additional expenses related to providing coverage to more people or paying penalties. Some analysts view this delay however, as the beginning of the entire bill unraveling. This change also does not affect small employers with less than 50 full time "equivalent" employees, as there are no mandates in the ACA for these employers to provide coverage.
Notice the word "equivalent" inserted with full time employees, which is key for defining large group employers. First of all, a full-time employee defined by ACA is one who works 30 or more hours per week. Secondly, a company that also employs part-time employees must now count a percentage of these folks when adding up their full time roster. Therefore, to determine the total number of "full-time equivalent employees", the employer must add together the hours of service for employees who were not full-time employees (but not more than 120 hours of service for any employee) and divide the total number of hours of service by 120. Here is an example illustrated by the Leavitt Group:
Example: How 10 Part-Time Employees = 6 "Full-Time Equivalents"
- 4 PT-EEs who work 25 hours/week = 400 hours/month
- 4 PT-EEs who work 15 hours/week = 240 hours/month
- 2 PT-EEs who work 10 hours/week = 80 hours/month
- 10 PT-EEs = 720/ 120 = 6 "FTEs"
Part-time employees are counted as "full-time equivalent" employees for purposes of determining whether an employer is a large employer, subject to the penalties. However, an employer will not pay a penalty for a part-time employee, even if that employee receives subsidized coverage through the Exchange. The reason I even go into detail on this 50 number threshold is that even though there is a delay in mandates and penalties for groups over 50, some of you who provide a health plan for your full time and are set up as a small group, could now be considered a large group for ACA purposes.
Finally, the individual mandate (requiring Americans to have health insurance) remains in place, and the Exchanges are still on course to open for business on October 1st. MNsure is the name of our State's exchange, and we will be able to assist people who