In preparation for the 2016 Affordable Care Act (ACA) regulations, HAP is reviewing our groups that are currently considered “large,” but may be considered “small” in 2016. Group size will be determined by eligible employees. Employers with 1-100 eligible employees will be considered a small group in 2016; employers with 101+ eligible employees will be considered a large group in 2016.
How many eligible employees do you have?
Eligible employees include full-time employees (those who receive a W-2 form) who are employed, on average, at least 30 hours of service per week, plus full-time equivalent employees (FTEs).
To calculate the number of eligible employees, you need to first separate your full-time employees from all others. All of the “other” employees need to be calculated as full-time equivalent employees, as follows:
- Add all of the hours for the non-full-time employees for the month and divide the total number of those hours by 120. This gives the number of FTEs.
- Then add the number of FTEs to the total number of existing full-time employees to determine how many eligible employees there are.
ABC Company has 60 full-time employees (employed 30 or more hours per week on average). They have 20 employees employed an average of 15 hours per week.
20 employees x 15 hours per week x 4 weeks = 1200 total monthly hours worked by part-time employees
1200/120 = 10 full-time equivalent employees
60 full-time employees + 10 full-time equivalent employees = 70 eligible employees
At a very high-level, some of the ACA requirements for small groups and large groups include:
Small groups (1-100 in 2016)
If offering group health care coverage, the group must purchase a Qualified Health Plan (QHP). QHPs are ACAcompliant plans that cover Essential Health Benefits and follow established limits on cost-sharing. All QHPs are grouped in different metal levels – Platinum, Gold, Silver and Bronze – based on actuarial value, or the percentage of health care costs the plan covers. Premium prices are determined using per member/per month rating, the zip code of the business, and age rating ratio no greater than 3 to 1. These factors do not include health status, gender or industry type. This will be effective with the group’s 2016 renewal date.
Large groups (101+ in 2016)
In 2016, the employer must offer affordable health insurance coverage to at least 95 percent (currently 70 percent) of its full-time workers and their children and pay for at least 60 percent of the coverage. If not, the employer will be subject to taxes (Employer Shared Responsibility Payment).
- IRS Determining if Employer is an Applicable Large Employer: irs.gov/Affordable-Care-Act/Employers/Determining-if-an-Employer-is-an-Applicable-Large-Employer
- The ACA and your business: choosehap.org/group/health-care-reform-for-groups
- IRS Affordable Care Act Tax Provisions for Employers: irs.gov/Affordable-Care-Act/Employers/Affordable-Care-Act-Tax-Provisions-for-Employers
- IRS Q&A on Employer Shared Responsibility Provisions under the ACA: irs.gov/Affordable-Care-Act/Employers/Questions-and-Answers-on-Employer-Shared-ResponsibilityProvisions-Under-the-Affordable-Care-Act
The above information is for general guidance only. HAP recommends that you consult with your insurance agent and/or tax advisor to help understand the ACA regulations as they relate to employer group size.
Source: HAP – HAP.ORG