Larger businesses that employ workers with variable hours should start a six-month measurement period May 1 — July 1 at the latest — to determine whether they need to offer those employees health insurance next year under Obamacare, employee benefit attorneys say.
“Employers need to look at their employee populations now and determine who they'll need to cover,” McAfee & Taft attorney Brandon Long said. Businesses, especially those with calendar-year health plans, are running out of time, he said.
Long's comments came at a labor and employment seminar presented by his firm Tuesday at the National Cowboy & Western Heritage Museum. The conference drew about 700 human resources professionals from across the state.
Under new health reform laws that take effect Jan. 1, larger businesses — those with 50 or more full time equivalent employees — must offer health insurance or pay penalties. “The calculation to determine your number of full time equivalent employees includes a combination of your full time and a bunch of your part-time,” Long said.
Business owners who have separate entities, say a bank and a shoe company, need to combine their numbers to determine if they have to offer insurance, Long said.
Those businesses that find they are subject to mandates need to determine which workers qualify for coverage based on a designated measurement period, he said. According to the new statutes, employees who average at least 30 hours a week, or 130 hours a month, qualify.
Attorney Jim Prince advised employers to tell their part-time employees — whom they always intended to work 29 or fewer hours a week — that they, starting May 1, plan to limit their hours accordingly.
The good news is there's a margin of error for employers, Prince said. Those who offer insurance to 95 percent of their full time equivalent employees won't be hit with a tax, he said.
Under the new mandates, employers can't discriminate on the basis of eligibility or benefits between highly compensated employees and non-highly compensated employees, Prince said.
The only exceptions are fully-insured, grandfathered health plans, or those that haven't been materially changed since March 2010, he said. But with coming regulations, that exception may go away, he said.
Teah Corley, chief executive of Premier Source consulting firm and insurance agency, told attendees that larger employers can expect premium increases of roughly 7.4 percent next year, compared with jumps of some 30 percent or more for plans in the smaller market.
Much of the increased costs, she said, are due to new fees on insurance carriers, which they're expected to pass along to their clients.
At a glance
New mandates coming
Businesses with 50 or more full-time equivalent employees the preceding year must offer health insurance to employees who work 30 or more hours per week or pay annual penalties of $2,000 per full-time employee, excluding their first 30. The hours worked by part-time employees (i.e., those working fewer than 30 hours weekly) are included in the calculation to determine whether a business must offer insurance. The formula takes employees' total number of monthly hours worked, during a designated three-month measurement period, divided by 120 (the total monthly hours for a full-time, or 30-hour-a-week worker). An employer with 35 full-time workers and 20 who average 24 hours a week, for example, could be deemed as having the equivalent of 51 employees. The 20 part-time employees who work an average of 96 hours per month would count as 16 full-time workers — 1,920 (20 multiplied by 96) divided by 120. Employers may not be subject to mandates if they only exceed 50 full time equivalent employees for 120 days or fewer a year.
The waiting period for insurance for new hires can't exceed 30 days.
Most residents must have health insurance or pay penalty taxes on their 2014 tax returns. Residents between 133 percent of the federal poverty level ($15,282 for 2013, or $31,322 for a family of four) and 400 percent ($45,960, or $94,200 for a family of four) can buy health insurance through Oklahoma's federally-run exchange and be eligible for variable tax credits based on annual income and family size. Online or phone enrollment begins Oct. 1; coverage is effective Jan. 1.
Businesses can face fines of $3,000 per employee for each worker who buys insurance on the exchange if the company's insurance is deemed inadequate (covers less than 60 percent of essential benefits) or unaffordable (costs more than 9.5 percent of a worker's salary, or $117.67 monthly for a minimum-wage worker).
Employers need to look at their employee populations now and determine who they'll need to cover.”
McAfee & Taft attorney