It’s been nearly five years since President Obama put his pen to the Affordable Care Act, and its employer mandate has finally kicked in. But its implementation has brought a new pitfall to light.
As you know, the mandate says that starting in 2015 the largest employers (those with at least 100 full-time equivalent employees) must offer coverage to their full-time equivalent employees to avoid the law’s penalties.
But what at least some employers will likely fail to realize is this: There’s another group of workers who, under certain circumstances, will have to be offered coverage as well — former full-time equivalent employees.
Those familiar with Obamacare’s formula for calculating full-time employees know there is a “measurement period” during which employers need to track the hours worked by variable-hour employees to see if they average at least 30 hours per week (the threshold to be considered full-time) during that period.
The measurement period must be at least three months long.
Following the measurement period, employees enter a “stability period,” which must be at least as long as the measurement period or six months, whichever is greater. During the stability period the employee’s status, as “full-time” or “part-time” is locked in.
Where employers will get into trouble
Here’s a common scenario under which these rules will likely trip up some employers to begin the new year, as eluded to by employment law attorney Keith R. McMurdy of the firm Fox Rothschild.
Say you’ve got an employee whose hours drop below 30 per week at the start of 2015. Some employers may think that person’s no longer a full-time equivalent employee under Obamacare and elect not to offer the person employer-sponsored health insurance.
But that would be costly mistake if the employee’s measurement period came to a close at or near the end of 2014 — and the employee was averaging at least 30 hours per week during that measurement period.
Under that scenario, the employee would have to be offered insurance for his or her employer to avoid Obamacare’s steep non-compliance penalties.
The person may lose benefits eligibility later in 2015. But he or she must be considered a full-time equivalent employee for at least six months after the measurement period and no shorter than the measurement period.
