You’re not surprised anymore when it rains the one time you forget to roll your car windows up.
And you’re definitely not surprised anymore when lawmakers craft infinitely complex legislation that only vaguely resembles conversational English on its best day.
Perhaps there’s no better example of that than the Affordable Care Act.
But business owners are still asking the questions. They’re still expecting people like us to help them make sense of the terms and understand their responsibilities as an employer.
Here at Complete Payroll, we have a few ACA subject matter experts - and let’s just say we think the coyote will catch the roadrunner before you stump them on a question. (Seriously, we’ll take any question you’ve got.)
Anyway, let’s just start with some of the most common ACA terms and what they mean…
Applicable Large Employer (ALE). Any business that employs at least 50 full-time and full-time equivalent employees, the law defines it as an applicable large employer, and as such, it is required to offer affordable health coverage to full-time employees and their dependents.
Full-time equivalent employee (FTE). An FTE is represented by every 30 hours of employment per week or 130 hours in a calendar month. To figure out how many FTEs there are in a company, divide the total hours paid to all part-time employees for a month by 130, then add that amount to the number of dedicated full-time employees. Do that calculation for every month of the year to determine if the average of those totals in 50 or more.
Minimum value. Minimum value refers to health insurance, when a health insurance plan covers at least 60% of the total allowed cost of benefits that are expected to be incurred under the plan. It is different than minimum essential coverage, which is defined as the coverage an applicable large employer is required to offer full-time employees to avoid paying the employer-shared responsibility payment.
Employer-shared responsibility payment. Simply put, an applicable large employer (ALE) that does not offer qualified health care coverage to a specific percentage of its full-time employees may have to pay one of two nondeductible excise taxes.
Do you need to pay those excise taxes?
Yes, if the ALE doesn’t provide the required health care coverage, chances are it’ll need to pay them this year if it employed an average of 100 or more full-time employees during the previous year.
What else do you need to know?
Every ALE must report to the IRS what health care coverage it offered (or didn’t offer) to every one of its full-time employees. And they have to provide copies of these reports to its employees, too. If not, the business is subject to a hefty fine.
What’s the most important thing to know?
When you partner with Complete Payroll, you’re assigned a Subject Matter Expert (SME) to assist with the Affordable Care Act reporting. We’ll explain all the options, help you get started, track the entire process and submit the year-end reports for you.
But you don’t even have to be a client to approach us with a question or leverage us as a resource. Seriously. Try to stump us. We dare you.
