by, Kelley Carson, Complete Payroll Corporate Trainer & ACA Subject Matter Expert
If you’re still struggling with the ACA and trying to make sure you are compliant under the law, read on!
Unfortunately, the Affordable Care Act (ACA) can be a little confusing. After all, it’s a law, and laws tend to be written in the opposite of plain English. If you’re still unclear about your responsibilities as an employer, or if you find it difficult to make sense of some of the terms used in the ACA, here’s a guide to the most frequently used terms you are likely to hear:
Applicable large employer (ALE). Is your company considered an applicable large employer? If it employs at least 50 full-time and full-time equivalent employees, the law defines it as an applicable large employer, and as such, you must offer affordable health coverage to full time employees and their dependents.
Full-time equivalent employee (FTE). So, what’s a full-time equivalent employee then? Answering this question involves math. An FTE is represented by every 30 hours of employment per week or 130 hours in a calendar month. To figure out how many FTEs in your company, divide the total hours paid to all part-time employees for a month by 120. Then add that amount to the number of dedicated full-time employees. Do that calculation for every month of the year and determine if the average of those totals is 50 or more.
Minimum value. Minimum value refers to health insurance, when a health plan covers at least 60 percent of the total allowed cost of benefits that are expected to be incurred under the plan. It is different than minimum essential coverage, which is defined as the coverage an applicable large employer is required to offer full time employees to avoid paying the employer-shared responsibility payment.
Employer-shared responsibility payment. This one is a little complicated, but to put it as simply as possible: if you are an applicable large employer that does not offer qualified health care coverage to a specified percentage of your full time employees, you may have to pay one of two nondeductible excise taxes.
Do you need to pay those excise taxes? Yes, if you are an applicable large employer and you don’t provide the required health care coverage, chances are you’ll need to pay them this year if you employed an average of 100 or more full-time employees during 2014; and you’ll probably have to pay them next year if you employed an average of 50 or more full-time employees during 2014.
What else do you need to know? If you are an applicable large employer, even if you only averaged between 50 and 99 full time equivalent employees in 2014, you must report to the IRS what health care coverage you offered, or did not offer, to every one of your full time employees. You have to provide copies of those reports to the employees too. And if you don’t, there can be a hefty fine for every report not provided to the IRS or the employee.
What’s the most important thing to know?
Complete Payroll can help!
When you partner with Complete Payroll, you will be assigned a Subject Matter Expert (SME) to assist with the Affordable Care Act reporting. We’ll explain all the options, help you get started, track the entire process and submit the year-end reports for you. Find out more about the ACA here or call us today.