When does my home care agency legally have to provide employees with healthcare benefits?
The Affordable Care Act (ACA) is a comprehensive healthcare reform law passed by the U.S. Congress in 2010 and has the primary goal of providing access to affordable healthcare to all Americans.
The ACA requires all employers with more than 50 full-time employees to offer health insurance coverage to their employees or pay a penalty.
A common pitfall for home care agencies, in staying compliant with ACA, is the misclassification of their employees. In home care, it’s not uncommon to have employees including:
- Full-time employees (work on average 30 hrs. per week or 130-hours per calendar month)
- Part-time employees
- Full-time equivalent employees (work part-time hours that are equivalent to a full-time employee)
- Seasonal employees
- Seasonal employees (temporary)
- Independent contractors (1099)
(Information about 1099 contractors here.)
To accurately calculate how many Full-Time Employees (FTEs) you have, use the following formula:
Total Hours Worked During a Year (Part-Time & Full-Time) / Number of Available FT Hours in a Year (2,080) = Full-Time Equivalent
*It is important to note that the calculation for FTEs can be complex and employers should consult with their tax advisor or qualified ACA specialist to ensure accurate compliance.
Things to consider or ask about when meeting with your advisor:
Within ACA, an Applicable Large Employer (ALE) is an employer with an average of at least 50 full-time employees (FTEs). An ALE may be a single entity (single-office home care agency) or may consist of a group of related entities (multi-location home care agency). If there is a group of related entities, these are referred to as ALE members.
Under the employer shared responsibility requirements include an employer mandate―pay or play. Both provisions, A and B, have penalty implications for employers with 50 or more full-time equivalent employees (large employers).
Part A: Affordable Coverage requires that the total employee contribution may not exceed 9.12% of the employee’s annual income.
Part B: The Minimum Value component requires employers to offer health care that includes physician and preventative care services.
What are the penalties?
Part A: $2,880/employee penalty will be assessed if the employer fails to offer Minimum Essential Coverage (MEC) to at least 95% of their employees and their dependents, and any full-time employees that obtains coverage through the marketplace. (The 4980H(a) penalty is issued for every full-time employee minus the first 30.)
Part B: $4,320/employee will be assessed if a premium tax credit will be incurred if the employer-sponsored coverage is unaffordable or does not provide minimum value, and if one or more full-time employees receives subsidized coverage through the marketplace. (The 4980H(b) penalty is issued if one or more full-time employees received a premium tax credit.)
The ACA’s look-back method: employee’s hours of service are tracked and measured during a predefined period to calculate the average hours they worked per week during that time frame. The predefined period is known as the “measurement period” or ACA look back period. If the employee’s average hours per week are 30 or higher, that employee is considered full-time for purposes of the ACA (regardless of HR full-time or part-time status.)
Reach out to Brian directly if you have questions or want to learn more about Vitable: brian@vitablehealth.com