ACA: Is Your Construction Employee Covered?

ACA: Is Your Construction Employee Covered?

Signed into law on March 23, 2010, the Patient Protection and Affordable Care Act, often referred to as the ACA, included reforms intended to improve Americans’ access to affordable health coverage while prohibiting abusive insurance company practices. A number of the provisions within the ACA have  gone into effect—in 2014 and 2015 that directly relate to your construction business.  Here are the biggest ones you need to be aware of as a construction employer.

Mandatory Affordable Health Coverage

If your construction company employs 50 or more full time and full time equivalent workers, you must provide them with health coverage. Should you fail to do so, the ACA requires you to pay a $167 penalty for each full time employee in excess of 30. You must pay this penalty monthly if even one of your full time workers purchases federally subsidized coverage through the exchange.

If the requirements of the ACA classify the health coverage you provide as unaffordable (costing more than 9.5 percent of annual household income), or should that health coverage fail to provide minimum value (covering less than 60 percent of health care expenses), you will also have to pay a monthly penalty of $250 for each full time worker who purchases federally subsidized coverage through the exchange.

These mandates went into effect January 2015. However, the government will use your 2014 payroll numbers to determine compliance. Note: while the employer-paid portion of your employees’ health insurance premiums is tax deductible, these penalties are not.

Full Time and Full Time Equivalent Employees

The Affordable Care Act defines full time employees as those who work at least 30 hour per week. However, you must also count part time workers when determining your construction company’s total number of employees. These workers’ monthly hours, when added together and divided by the number of part timers, becomes the number of full time equivalent employees you employ.

Seasonal Employment Spikes

In the construction industry, it’s quite common for employee numbers to fluctuate seasonally. Sometimes you may have 50 or more workers and fall under the “applicable large employer” definition—other times you may not. As such, you may be exempt from the ACA’s “pay or play” rule—provided your employee average does not exceed 50 for more than four months.

Calculating full time equivalent employees and determining whether your current health care plan is affordable and offers minimum value can be quite complicated. Consult your benefits manager or another knowledgeable expert for guidance and advice

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