Download The Affordable Care Act, Large Employers, and TimeClock Plus

Affordable Care Act, Large Employers,
and TimeClock Plus
The Affordable Care Act, Large
Employers, and TimeClock Plus
employers as well as the time and
attendance software industry. This
document is not an endorsement or
condemnation of the ACA, but
merely a look at how employers will
adjust to the upcoming changes in
policy as well as how they can utilize
TimeClock Plus to alleviate the
added demands on their
administrative staff.
Introduction
The Patient Protection and
Affordable Care Act (hereafter ACA
or “the act”) is a comprehensive
federal statute for health care reform
signed into law by President Barack
Obama on March 23, 2010. The act
introduces a sweeping set of changes
to the health insurance industry for
insurance providers and employers
to be implemented in stages until
2020. While the complete text of the
ACA comes out to 1,990 pages, this
white paper will focus primarily on
Section 4980H, “Shared
Responsibility for Employers
Regarding Health Coverage”
(hereafter § 4980H).
Background
The ACA is a tremendously
complex document that almost
immediately faced a major legal
battle that culminated in the
Supreme Court hearing National
Federation of Independent Business v.
Sebelius, No. 11-393 in June of 2012.
As a result, many businesses delayed
enacting policy to ensure ACA
compliance. However, the Supreme
Court upheld the majority of the
law, and both policymakers and
employers were faced with a
struggle to implement provisions to
the law as they were being written.
Below are the major components of
§ 4980H provides an in-depth
summary of the sweeping changes
large employers (defined as those
that employ more than fifty full-time
employees in any given year) will
have to make by the beginning of
2015. This paper will examine the
implications that the ACA and §
4980H in particular will have on
Affordable Care Act and Large Employers
© Data Management, Inc. All Rights Reserved. This document is confidential and shall not be duplicated, published or
disclosed, in whole or in part, without prior written permission of Data Management, Inc. This documentation is subject to
change without notice.
Rev. 7/24/13
1
Affordable Care Act, Large Employers,
and TimeClock Plus
and salaried employees can each
have separate periods though these
periods must be consistent for every
employee in the category).
§ 4980H and how they pertain
to large employers.
§ 4980H Summary
The major components of §
4980H will be implemented in 2015,
at which point all full-time
employees (those that work an
average of over thirty hours in a
week or 130 hours a month) must be
offered health insurance coverage by
their employer. Employees who are
hired as full time must be offered
benefits within 90 days. Variable
Hour Employees (employees that are
not classified on hire as either full or
part-time) must be assessed and
determined to be full or part-time at
the end of each measurement period.
Seasonal employees are considered
full-time for the purposes of
determining employer status if they
work an average of 130 hours in a
calendar month for over four months
in a year.
The measurement period is a
length of time between three and
twelve months which employers will
use in order to determine whether or
not Variable Hour Employees are
eligible for coverage. The stability
period is a length of six, nine, or
twelve months during which
employees that were determined to
be full-time during the measurement
period must be offered benefits. The
administrative period is a length of
up to ninety days, during which the
employer has time to determine
employee eligibility and offer
benefits.
Potential Fines and Risks
Employers that do not
provide coverage for 95% of their
full-time employees face an
annualized penalty of $2,000 per fulltime employee over thirty if an
employee without coverage receives
it through the state or federal
exchange. In addition, if an
employee declines coverage for a
number of reasons, such as expense
(in most cases, over 9.5% of the
Full-Time Employee Determination
Beginning in 2015, a large
employer must define measurement
and stability periods for their
employees, with an optional
administrative period. These periods
can be set separately for each
category of employee (e.g. hourly
Affordable Care Act and Large Employers
© Data Management, Inc. All Rights Reserved. This document is confidential and shall not be duplicated, published or
disclosed, in whole or in part, without prior written permission of Data Management, Inc. This documentation is subject to
change without notice.
Rev. 7/24/13
2
Affordable Care Act, Large Employers,
and TimeClock Plus
employee’s hours across the entire
measurement period. If the company
does not want Variable Hour
Employees to be classified as fulltime, it must ensure that each
individual employee does not work
over an average of 30 hours a week
or 130 hours in a calendar month
over the course of the measurement
period. Failure to properly track the
hours of Variable Hour Employees
can lead to the fines mentioned
above and a possible audit.
employee’s W-2 income for
employee coverage), the employer
will face an annualized penalty of
$3,000 per employee that declines
coverage and later gets affordable
coverage from the state or federal
exchange.
Examples:
The Example Corporation has
100 full-time employees and 80 seasonal
employees. At the conclusion of the
measurement period, it is determined
that 50 of the seasonal employees have
worked enough hours to be classified as
full-time. Should Example Corporation
choose not to provide insurance to their
full-time employees, the company will
face an annualized fee of $240,000
($2,000 multiplied by 120, or the
amount of full-time regular and seasonal
employees minus thirty).
How TimeClock Plus
Solutions Can Help
With the Benefit Status
Monitor for TimeClock Plus,
employers can keep track of parttime and full-time employees to
assist with ACA compliance. Below
are major components of the module
as well as ways that employers can
utilize the software to mitigate the
risk in managing Variable Hour
Employees.
If Example Corporation offers
insurance that the employees are unable
to afford, and fifty eligible employees
later obtain insurance through the state
or federal exchange, Example Company
will face an annualized fee of $150,000
($3,000 multiplied by the fifty employees
that purchased exchange insurance).
Employee Hour Reporting
The Benefit Status Monitor
for TimeClock Plus gives employers
have the ability to flag employees as
full-time or part-time/variable hour
within the program, as well as define
It is the employer’s
responsibility to keep track of each
Affordable Care Act and Large Employers
© Data Management, Inc. All Rights Reserved. This document is confidential and shall not be duplicated, published or
disclosed, in whole or in part, without prior written permission of Data Management, Inc. This documentation is subject to
change without notice.
Rev. 7/24/13
3
Affordable Care Act, Large Employers,
and TimeClock Plus
week, month, or measurement
period. The amount of time
necessitating a report can be set on
each individual employee. These
alerts will allow managers to make
informed decisions on the fly in
regards to workforce management
by ensuring that there are enough
employees available while smartly
managing hours to keep under the
measurement threshold.
a measurement period. Once
employees have been defined, the
software will allow managers to
instantly generate reports that show
how close an employee is on their
hours. The report will also feature a
cumulative total for hours across the
measurement period, allowing
managers ultimate flexibility in
scheduling employees while making
sure they do not go over an hourly
threshold.
With the Benefit Status
Monitor for TimeClock Plus,
companies have the opportunity to
see a considerable return on
investment as they have access to the
cumulative total of hours worked for
each part-time employee. This
information gives an employer
ultimate flexibility in scheduling
their employees while making sure
they stay under the average of thirty
hours in a week. This could negate
the need to hire too many part-time
employees in order to ensure you
have proper employee coverage.
This could also lead to reduced
overhead and HR workload as
employers are able to smartly
manage their workforce off of one
easy to read report.
These reports serve two major
functions – managers can see when
part-time or variable hour
employees are coming close to the
hour threshold as well as receive a
report on full-time employees who
are under on hours and may no
longer require benefit coverage. This
will prevent the need to manually
determine eligibility on an
individual level at the end of the
measurement period and allow
managers to smartly utilize their
employee hours.
Text and E-mail Alerts
The Benefit Status Monitor
will allow users to send out regular
text and e-mail alerts to managers
when an employee is coming close to
their hourly threshold across the
Affordable Care Act and Large Employers
© Data Management, Inc. All Rights Reserved. This document is confidential and shall not be duplicated, published or
disclosed, in whole or in part, without prior written permission of Data Management, Inc. This documentation is subject to
change without notice.
Rev. 7/24/13
4
Affordable Care Act, Large Employers,
and TimeClock Plus
comply or correctly categorize an
employee can lead to steep fines and
possible audits. With the Benefit
Status Monitor for TimeClock Plus,
companies will have instant access to
this employee information and can
make smart scheduling decisions to
make sure the right employees get
the correct hours.
Conclusion
As January 1st approaches,
every company faces a number of
unique challenges in policy
implementation. Companies that do
not use an automated timekeeping
solution will be forced to manually
track employee hours across their
measurement period. Failure to
Affordable Care Act and Large Employers
© Data Management, Inc. All Rights Reserved. This document is confidential and shall not be duplicated, published or
disclosed, in whole or in part, without prior written permission of Data Management, Inc. This documentation is subject to
change without notice.
Rev. 7/24/13
5