Navigating the Affordable Care Act: A Guide to Compliance
The Affordable Care Act (ACA) has been rolled out and is in effect, but employers are still struggling to understand how to successfully comply with healthcare reform. Companies are tasked with evaluating their payroll processing methods to ensure that they will not be hit with fines associated with the ACA. Understanding new regulations and evaluating business practices to ensure compliance is the best course of action.
Accurately Tracking Attendance
Accurate measurements related to employee attendance are more important now than ever before. Tracking hours worked can help companies determine whether they are considered to be large businesses under the ACA, and the requirements for offering insurance coverage to employees differs based on this definition. The number of full-time employees can be accurately calculated based on attendance records, and outsourcing payroll tasks often leads to better measures of hours worked by employees.
If a business is considered to be a large company based on employee attendance data, it is required to share in the costs of healthcare coverage for employees. Under the ACA, a large company is one that employs 50 or more full-time employees. Failure to share costs will result in tax penalties. Essentially, accurately measuring hours worked by employees by outsourcing payroll tasks can help businesses avoid hefty penalties.
What Is a Full-Time Employee?
While employers may be aware that they are required to share in insurance premium costs if they employ 50 or more full-time employees, these businesses may be unclear on the definition of a full-time employee. Employees are not evaluated for full-time status until they have worked for the company for a period of 90 days.
Once this waiting period has passed, full-time employees are those who work either an average of 30 or more hours per week or 130 or more hours per month. Payroll records are used to determine how many hours employees work.
Future Changes to Healthcare Regulations
While the majority of changes to healthcare regulations have already taken effect, employers should be aware that one more change is on the horizon. A tax on high-cost healthcare plans will be levied on employers starting in 2018.
The definition of a high-cost plan will be determined by thresholds set by the government. Employers that offer their employees healthcare plans that exceed these thresholds will be subject to a 40 percent tax on the amount that exceeds the maximum threshold. The intention of this penalty is to discourage employers from offering plans that are not considered to be cost-effective for the end user.
The ACA requires employers to be more proactive about evaluating their payroll processing methods and keeping a close eye on human resources. Outsourcing payroll to an experienced company like Integrated Payroll Services takes some of the burden of ACA compliance off of the shoulders of the business to allow companies to focus on their continued success.
For a start in ACA compliance read The Affordable Care Act: An Employers Guide to the Maze (PDF format)