You can’t take the summer off from the ACA

4 reasons you cant take the summer offIt’s July and we are halfway through the summer; I know a lot of my clients and brokers are taking their yearly family vacations.

While you should enjoy time with your family, the end of the year will be here before you realize and unfortunately we can’t afford to take the summer off from the Affordable Care Act (ACA).

Here are 4 reasons why.

1.  IRS penalties are accruing monthly.

We commonly refer to the IRS penalty amounts as an annual amount but the penalties are actually calculated on a monthly basis. Acting sooner rather than later and getting a compliant plan in place can save employers valuable dollars on penalties that won’t have the opportunity to accrue.

2.  Exchange notices are arriving.

For every employee that logs onto the Insurance Exchange and receives a health care subsidy, a complex trail of communication and paperwork begins that requires employers to prove the status of their health care offering. If an employer has chosen to offer coverage that isn’t compliant or no coverage at all, they will have no choice but to pay the penalties.

3.  Employee eligibility is constantly changing.

Employee status can change on a daily basis, so employers can’t afford to take a break from data collection and management. Employers have to be ready for whatever comes their way – even an IRS audit. ACA requirements have become tougher in 2016, employers must now offer affordable coverage to at least 95% of their full-time employees – up from 70% in 2015. As these and other changes take place, employers have to continue to calculate benefits eligibility and affordability for required employees.

4.  Annual reporting is just around the corner.

Reporting is an annual event. But employers can’t take a break for the rest of the year, the ACA record keeping they do all year is essential for the next reporting season. This includes the information employers must provide to the IRS and their employees that demonstrates the health care coverage offered to employees meets minimum essential and affordability requirements of the ACA.

Bottom line? The ACA is complex and this year the rules are firmer than ever. Most organizations don’t have the expertise and processes to stay on top of these changes and take accurate action.

The good news is, we can help with all of these issues and more. But employers need to take the first step and not delay. Choose to benefit from our comprehensive expertise so you can look forward to smooth ACA compliance and a great rest of the year.

Seasonal Workers and Seasonal Employees – Clarifying Misunderstood Terms

Seasonal Workers & Seasonal Employees

Summer is here and that means the agricultural season will soon be in full swing. Unfortunately, we have heard of several non-compliant strategies being implemented throughout the agriculture industry. Part of the confusion is being generated from two terms with distinct meanings under the Affordable Care Act (ACA): seasonal workers and seasonal employees. The purpose of this article is to review the difference between seasonal workers and seasonal employees and to explain when each definition is applicable to an employer.

A seasonal worker is an employee who performs labor or services on a seasonal basis. The final regulations state this definition includes retail workers employed exclusively during holiday seasons and workers covered by 29 CFR 500.20(s)(1). A worker is covered by 29 CFR 500.20(s)(1) if ordinarily, the employment is of the kind exclusively performed at a certain period of the year and which, from its nature, may not be continuous or carried on throughout the year. A worker can still be covered by 29 CFR 500.20(s)(1) (and thus still be considered a seasonal worker) if the worker moves from one seasonal activity to another even if the worker is employed during a major portion of the year. Employees with comparable positions to the two examples included in the final regulations can also qualify as seasonal workers so long as the employer is making a reasonable, good faith interpretation of the term.

Seasonal workers are only applicable for the seasonal worker exception which determines if an employer is an Applicable Large Employer (ALE). Only employers who are ALEs have to comply with the Play or Pay Mandate. For the seasonal worker exception to apply an employer must satisfy two requirements:

  1. The employer must not be in excess of 50 full-time employees (including FTEs) for more than 120 days in the preceding calendar year; and
  2. The employees employed during the period that is no more than 120 days who cause the employer to exceed 50 full-time employees (including FTEs) must be seasonal workers.

If these conditions are satisfied, the employer will not be an ALE despite averaging 50 or more full-time employees (including FTEs) throughout the preceding calendar year. The seasonal worker definition is not relevant for any other determination under the ACA.

A seasonal employee is defined in the final regulations as “an employee who is hired into a position for which the customary annual employment is six months or less.”   The preamble to the final regulations provides further context to the definition saying the period that is six months or less should begin in approximately the same part of the year, such as summer or winter.

The seasonal employee definition can be broken into the following two factors:

  • The position must typically last for a period of six months or less; and
  • The position must begin in roughly the same part of the calendar year.

The seasonal employee is unique compared to part-time, variable hour, and full-time employees (the only other classification options for new employees) because it does not factor in an employee’s hours of service. A seasonal employee could work 80 hours a week and still be classified as a seasonal employee so long as the two factors discussed above are true. If an employee is classified as a seasonal employee, the employee is placed into an initial measurement period and treated the same way as a part-time or variable hour employee.

Employers need to be careful with the distinction between seasonal workers and seasonal employees. Remember, seasonal workers are only relevant for determining if an employer is an ALE. Seasonal employees are only relevant when determining if a new employee can be placed into an initial measurement period. However, make sure an employee classified as a seasonal employee meets the two criteria discussed above. Currently, there are no correction procedures for misclassified employees so an employee who is misclassified as a seasonal employee could trigger huge fines for an employer.