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By Joseph A. Bucci Jr., gbac Inc.
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workers. As a member of CEMA it is fair
to say that the winter season is such a time
for our industry. How does the Affordable
Care Act (“ACA”) apply to these seasonal
employees that many of you have retained
from year to year?
For instance, should these employees
be counted in determining whether an
employer is large enough to be subject to
the ACA’s “play or pay” mandate? And
assuming an employer is subject to this
mandate, how do seasonal employees affect
the penalties the employer might have to
pay? Many CEMA members have raised
questions or voiced concerns over how
such a policy is to be managed.
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Starting in 2015, a “large employer”
(generally defined as an employer having
50 or more full-time employees) could face
a monthly penalty equal to 1/12 of $2,000
for each full-time employee (in excess of
30) if it fails to offer at least 95 percent of
its full-time employees (and their children
under age 26) at least a minimal level of
health coverage.
Moreover, even if an employer avoids
this penalty by making an appropriate
offer of health coverage, it could still face a
monthly penalty equal to 1/12 of $3,000 for
any full-time employee who (1) is eligible
for a federal tax credit to purchase coverage
through a state-based “Exchange,” and (2)
declines the employer’s offer of health cov-
erage in favor of that Exchange-provided
coverage. In order to avoid
this
penalty,
a large employer must ensure that the cov-
erage it offers is both “affordable” by each
full-time employee
and
sufficiently generous
to meet a “minimum value” standard.
EDITOR’S NOTE: The following article
is adapted from the Connecticut Energy
Marketers Association CEMA Pipeline
newsletter with the permission of the
Association and gbac.
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In general, an employer will be a “large
employer” – and therefore subject to these
play or pay rules
– if it averaged 50 or more
full-time employees on business days
during the prior calendar year. Although
“full-time” is defined as working 30 or more
hours per week, even hours worked by
part-
time
employees must be counted − and then
divided by 120 per month − to determine the
number of “full-time equivalent” employees
(“FTEs”). Those FTEs must then be added
to the full-time employee count. Thus, an
employer with 45 full-time employees and
10 part-time employees who averaged 15
hours per week would be treated as having
50 full-time employees – and therefore
subject to the play or pay mandate.
In counting the number of employees,
IRS regulations require that all related
employers be treated as a single employer.
These “controlled group” rules are common
in the benefit-plan context and may affect
many CEMA members with multiple entities
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