Q&A with Cori Loomis
Part-time workers are included in health care law mandate
Q: One provision of the recently upheld Affordable Care Act (ACA) requires employers with more than 50 employees to provide health insurance effective Jan. 1, 2014. What are the current requirements for employers to provide health insurance for employees?
A: Currently, employers of all sizes are not required by law to provide health insurance to their employees. The ACA doesn't absolutely require employers to provide health insurance, either. Instead, it requires employers with 50 or more full-time equivalents (i.e., those working 30 or more hours a week) to provide qualified health insurance coverage or pay a penalty. There are actually two penalties that may be imposed on employers under what's become known as the “Play or Pay” mandate: one for employers that choose not to provide minimum essential coverage and another for employers who provide coverage that is deemed inadequate or unaffordable.
Q: How does the act determine which employers are subject to this requirement?
A: Only “large employers,” or those with more than 50 full-time equivalent employees during the preceding calendar year, are subject. The key term is the word “equivalent,” which means full-time and part-time employees are included in the calculation. The hours worked by part-time employees (i.e., those working fewer than 30 hours per week) are included in the calculation, on a monthly basis, by taking their total number of monthly hours worked 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.
If an employer exceeds 50 full-time employees on a temporary or seasonal basis, it may not qualify as a “large employer” if the number of full-time employees exceeded 50 for 120 days or fewer.
Q: What should employers do to prepare?
A: Employers first should run the calculation to determine if they qualify as a “large employer.” If they do, then employers need to analyze whether it is better for them to provide health insurance coverage that meets the minimum essential coverage requirements or pay annual penalties — $2,000 per full-time employee, minus the first 30 workers who are excluded from the assessment.
PAULA BURKES, BUSINESS WRITER