In the Affordable Care Act (ACA) era, companies need to track their employees’ hours more closely than ever before, says Tony Chiviles, president of PayBridge.
And if you aren’t, then you’d better start.
“A lot of people believe they don’t have to do this, or think they are exempt from it. And it’s not the case,” Chiviles says. “Everyone with 50 full-time or full-time equivalent employees, no matter what you are — nonprofit, charter school, government entity or whatever kind of company — is responsible for this information.”
You can’t put your head in the sand and hope a Republican gains control of the White House, either.
Colleen Bement, vice president of Business Development at PayBridge, doesn’t think the ACA will ever go away completely, no matter what the political situation.
It may change a little, but that takes time so you can’t use that as a business strategy for the near future, she says.
Smart Business spoke with Chiviles and Bement about what employers need to be tracking this year for ACA reporting and tips for mitigating the cost.
What’s going on with the ACA’s implementation?
The new reporting forms have been slightly delayed, which is easing the burden on employers who were scrambling to gather information, figure out how to complete the reports and who would do the work.
The deadline for delivering Form 1095-C — similar to a W-2 for health insurance — to employees was pushed back to March 31. Form 1094-C — the transmittal form that helps the IRS determine if your organization is a large employer, if you offer affordable coverage and if you should be assessed penalties — is now due June 30.
Employers need to make a ‘reasonable effort’ on the reporting and tracking of this health care information. They can use this year to identify problem areas, so they can be ready when the IRS is more diligent next year.
Also, keep in mind that in 2015 large employers were only required to offer insurance to 70 percent of their full-time employees; for 2016 that goes up to 95 percent.
What do large employers need to know when tracking employee hours?
Employers must be very diligent in tracking hours of employees that typically haven’t been considered full time. Full time for the ACA is 30 hours, not the 35 to 40 hours most companies use.
In the case of an audit, the government won’t accept a paper time sheet. Employers must track the hours with a time clock, Web punch or something to that affect.
There are tools that can help monitor employee hours, and then notify managers if an employee is reaching his or her full-time threshold for that week or month. So, an automatic email might say that John Smith is two hours away from being a full-time equivalent employee this month, make sure he goes home on time.
In addition, each large employer must determine measurement, administrative and stability periods, which will change who is considered full time and needs to be offered coverage.
For example, a measurement period is the number of months, anywhere from three to 12, you look back to see whether or not an employee is full time. A restaurant that has more temporary employees or employees who work longer hours in the summer could choose a longer measurement period, in order to average out the hours and not have to offer coverage to as many people.
Again, tools are available to test these variables and figure out what’s best for your company. Many payroll companies are offering these services, although some only offer it to large employers. If you use these service tools through standalone vendors, it may be more expensive because they don’t already have your hours entered in their system.
If your company has always offered insurance, you still need to track and report your employees’ hours. And yes, it will cost money and time to do this. That’s why it’s important to take time to know what you need to do and ask for help as needed, from a payroll company, health insurance broker or accountant. If you have help that is well versed and understands what’s going on, for at least the first year, you can mitigate the cost of what must be done.
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