Affordable Care ActFrequently Asked Questions
1. What’s a full-time employee?
A full-time employee is one that averages 30 or more hours per week, or 130 or more hours per month.
2. What if I do not employ 50 or more employees, whether full-time or part-time?
The employer is not subject to the Employer Mandate, if it employs less than 50 employees.
3. How much is the tax penalty?
There are two kinds of ACA tax penalties. If an employer subject to the Employer Mandate does not offer minimum essential coverage, it shall pay a penalty in the amount of $166.67 per month ($2,000 annual), per all full-time employees. If the employer does offer minimum essential coverage, but the coverage is not adequate or affordable to any employee, the employer shall pay $250 per month (or $3,000 annually) for each applicable full-time employee.
4. What if I’m signatory to the unions/guilds and they provide the minimum essential coverage to the union members?
If the employer is participating and paying into the union/guild plans for its full-time employees, and the coverage offered meets the legal requirements of ACA, the employer will be compliant with the Employer Mandate.
5. I hire, lay-off, and rehire employees short-term throughout the year, depending on the projects I’m producing. How do I determine if these specific employees qualify as full- time, on-going employees and should be offered health insurance?
It depends on the length of the break in service. First you must determine if the employee is a full-time employee. If yes, and the new project is interrupted by a break in service that is four weeks or longer than the most recent period of employment, the employee is to be considered a new employee, and accordingly, can be offered minimum essential coverage.
6. What if the full-time employee is working for two different employers at the same time? And throughout the week the employee works 30 or more hours for each employer. Which employer is mandated to provide coverage?
Both employers may be mandated to offer coverage; however, the employee can select one over the other
7. Between the production company and the payroll company, which entity will report what information to the IRS?
The production company will need to file an information return on IRS form 6056, which will list identifying information about the employer, the number of employees for each month of the tax year, identifying information about each full-time employee for each month of the tax year, certification of whether health coverage was offered to employees, and information about the health coverage offered. The payroll company will issue the form W-2 and other payroll tax returns, which will identify the value of the coverage. Media Services will assist with IRA filing.
8. What about employees working through loan-outs? Will they be a part of the total full-time employee count?
No. True loan-outs, such as independent contractors, will not be treated as employees.
9. If I have union employees, and the unions/guilds provide minimum essential coverage, do I have to provide the exchange coverage notice to the employees or will the unions/guilds provide the notice?
Most unions/guilds do not provide the exchange coverage notices to their members. Some unions/guilds have notified their members to expect the notices directly from their employers. Since this is a mandate for the employer, and the unions/guilds are not the employer, the production company should provide the notice to make sure it is in compliance. Lines 13 through 16 of the DOL’s notice template are optional. You should complete Part B of the notice and obtain certification or credible proof from the unions/guilds that their plan coverage is adequate under the ACA, which can be included with the notice.
10. Is it permissible for another entity (such as an issuer, union/guild, multi-employer plan, or third-party administrator) to send the employee exchange coverage notice on behalf of an employer to satisfy the employer's obligations?
Yes, an employer will have satisfied its obligation to provide the exchange coverage notice with respect to an individual if another party provides a timely and complete notice. However, an employer is not relieved of its statutory obligation to provide the notice if another entity provides the notice to only participants enrolled in the plan, if some employees are not enrolled in the plan. The employer must provide the notice to all employees not enrolled in any third party plan.
11. Will there be any new record-keeping obligations imposed on employers connected with the ACA?
Yes. While ACA record-keeping requirements are still evolving, we recommend that at the very minimum you keep documentation of the employee’s start and end dates, duties performed, pay rate, union affiliation, as well as copies of any notices provided. Additionally, if you implemented any measurement, stability or administrative periods, document and retain such policies as well as if minimum essential coverage was offered or not.
12. Who is subject to the Individual Mandate?
The Individual Mandate calls for each individual to have MEC for each month, qualify for an exemption, or make a payment when filing his or her federal income tax return. It applies to individuals of all ages, including children. The adult or married couple who can claim a child or another individual as a dependent for federal income tax purposes is responsible for making the payment if the dependent does not have coverage or an exemption.
Questions and Answers on the Individual Mandate can be found at this IRS webpage:
13. How will Media Services help the client to comply with the exchange coverage notice requirement?
Upon request, Media Services will provide you with a report, which will identify all employees paid by the specific payroll company on your production. The report may indicate the employee information such as name, address, job/show name, days worked, weeks worked, hours worked per week and any breaks in service.
14. Can an employer be fined for failing to provide employees with the exchange coverage notices?
No, there is no fine or penalty under the law for failing to provide the notice at this time.
15. Does Media Services have any health insurance plans that meet the ACA requirements in which a client can participate?
Yes, Media Services does maintain plans that meet the tests of the ACA. Whether the plans are affordable or not is dependent on the annual income levels of your individual employees. Media Services’ premium affordability report calculates minimum employer contributions pursuant to ACA requirements on an employee-by-employee basis. If you have further questions regarding our plans, please contact us at 310 471 9393.
16. I do not fully understand the different periods and how to apply them for my business to determine how many full-time employees I have. Can you provide more detail on these?
Yes. Below we will look at each period in more detail and how to apply it for your business.
What is the waiting period as defined by ACA?
A “waiting period” is any period of time that must expire before coverage becomes effective for a newly hired employee or dependent who otherwise meets plan eligibility requirements. An employer must offer an eligible employee coverage that is effective by the 91st calendar day, including weekends and holidays. If an employee takes longer than 90 days to accept the offered coverage, the employer is not in violation of the 90-day limit.
What is the measurement period as defined by ACA?
In general, the “look-back” measurement period allows the employer to select a look-back period of time to measure whether the employee worked an average of 30 hours per week. If the employee worked an average of 30 hours per week or 130 hours per month during the measurement period, the employer must consider the employee a full-time employee during the subsequent “stability” period, regardless of the number of hours the employee works during the stability period. The same method is applied if the employee does not average 30 hours or more hours during the measurement period.
How do I calculate the measurement period?
Calculation of the measurement period depends on whether the employee is (1) an ongoing employee, or (2) a new variable hour employee or seasonal employee.
For an ongoing employee, an employer may determine full-time status by using a measurement period of between 3 and 12 months. Under the rules, the employer is given discretion to choose the length of the measurement period provided it conforms with the length of time rules discussed above and that the determination is made on a uniform and consistent basis for all employees in the same category.
New variable hour employees and seasonal employees:
An applicable large employer may also use a measurement period for new variable hour employees and for seasonal employees in certain circumstances. A new employee is a variable hour employee if, based on the circumstances at the employee’s start date, it cannot be determined that the employee is reasonably expected to work on average at least 30 hours per week or 130 hours per month. Through at least 2014, employers may use a reasonable, good faith interpretation of the term “seasonal employee.” For new variable hour and seasonal employees, an employer may use a look-back period of between 3 and 12 months that begins on any date between the employee’s start date and the first day of the first month following the start date.
Do I have to use a consecutive period of time?
Yes. The measurement period must use a consecutive period of time.
What is the “stability period” as defined by ACA?
The stability period begins immediately after the measurement period and any administrative period. Calculation of the stability period depends on the type of employee and whether he or she is determined to be a full-time employee during the measurement period.
How do I calculate the stability period?
If an employer determines that an ongoing employee worked full-time during the measurement period, then the stability period must be at least the greater of six consecutive calendar months or the length of the measurement period. If the employer determines that the ongoing employee was not a full-time employee during the measurement period, then the stability period must be no longer than the measurement period.
New variable hour and seasonal employees:
If a new variable hour or seasonal employee is determined to be a full-time employee, then the stability period must be the same as that for ongoing employees – either six consecutive calendar months or the length of the measurement period, whichever is longer. If a new variable hour or seasonal employee is determined not to be a full-time employee during the measurement period, then the stability period may be, at a maximum, one month longer than the measurement period. However, the stability period may not exceed the remainder of the employer’s measurement period for ongoing employees (plus any associated administrative period).
What is the “administrative period” as defined by ACA?
Employers may impose an administrative period that begins immediately after the end of the measurement period and ends immediately before the stability period. The purpose of this administrative period, which may last up to 90 days, is to give employers time to determine employee eligibility for coverage, notify them of their eligibility, and enroll them in the plan.
How do I calculate the administrative period?
The administrative period may last up to 90 days. However, this administrative period cannot create a gap in coverage for ongoing employees who are enrolled in coverage because of full-time employee status. For new variable hour employees and seasonal employees, the measurement period and administrative period combined may not extend past the last day of the first calendar month beginning on or after the one-year anniversary of the employee’s start date.
Can I use different measurement periods, stability periods, or administrative periods for different categories of employees?
Yes. According to the proposed rule on the employer mandate, an employer may select different measurement periods, administrative periods, and stability periods for certain categories of employees. For example, the proposed rule states that an employer may select different periods for:
- Each group of collectively bargained employees covered by a separate collective bargaining agreement.
- Collectively bargained and non-collectively bargained employees.
- Employees whose primary places of employment are in different states.
Can I select a measurement period where I have the fewest number of employees?
For example, I am a seasonal employer with 50 full-time employees for six months. For my look-back period, can I select the six months where those seasonal employees are not working for me?
No. For new variable hour and seasonal employees, the measurement period must begin on a date between the employee’s start date and the first day of the first calendar month following the employee’s start date. Therefore, a seasonal employer would not be able to use, as the measurement period, the six months where those seasonal employees are not working.
17. Can an employer choose to offer different plans/benefits to different groups of employees? For example, can the employer choose to contribute towards the toward various employees’ premiums in varying amounts?
Yes. The nonenforcement of the ACA nondiscrimination rules is being extended until further notice. As a result, the practices described above are permissible for the time being, under the ACA. The employer may want to have its employment-law attorney review these practices for compliance with other federal and state laws, including Title VII (i.e. civil rights laws).
18. I am an employer based in San Francisco and am covered by the San Francisco Health Care Security Ordinance (HCSO) aka Healthy San Francisco. Do I have to adhere to the ACA requirements?
Yes. Healthy San Francisco is a program through which a group of local providers deliver a specified package of services. It is not an insurance program, but rather a network incorporating primary care homes, linkage to specialty care, prepaid program fees, and customer service, sponsored by the city, the federal government, patient [co-payments] and fees imposed on San Francisco businesses that do not provide health coverage for their workers. It is a program designed to make health care services available and affordable to uninsured San Francisco residents.
Between Healthy San Francisco and the ACA, and that the ACA takes precedence. Since the recent decision to delay implementation of the ACA’s Employer mandate by a year, to Jan. 1, 2015, gives the city more time to assess the impact locally.
19. I’m starting a new production company this year. Since I have to utilize the entire 12 calendar months to calculate my company size, and the year has yet to end, how will I calculate my company size to determine if I have to offer benefits to any employees this year?
For purposes of determining whether an employer is an applicable large employer, full-time equivalent employees as well as full-time employees (FTEs) are taken into account. The determination of whether an employer that was not in existence in the preceding calendar year is an applicable large employer is based on the average number of FTEs that it is reasonably expected the employer will employ on business days in the current calendar year.