REAL-LIFE EXAMPLE: Company XYZ grew by acquisition, creating a situation obligating the company to large employer status and ACA penalties.
Each individual company continued to run their business as they always had. However, the common ownership laws made this employer what is referred to as an Applicable Large Employer (ALE) and now subject to penalties if they did not comply with ACA laws to provide ‘affordable’ health insurance to at least 95% of their full-time workforce.
To offer health insurance to 201 fulltime employees was unaffordable. So was the $531,990 annual ACA fine.
What we did: An extensive evaluation of each employee in each location. Determined which employees were essential for the location to operate and which employees could be reduced to working 29 hours or less. Employees not consistently working 30 hours or more a week are not considered fulltime and therefore not eligible to participate in the group health insurance.
There is a nuance here – when an employee is not offered health insurance, they may qualify for a premium tax credit on the Marketplace. Once a company offers its employees what the government considers affordable insurance that meets the minimum value definition, the employee and their dependents are no longer eligible for their Marketplace subsidy.
Our evaluation created a long-term affordable solution for the company and gave employees the opportunity to purchase health insurance that met the government requirements. The $531,990 fine is no longer an issue.
If you have 50 fulltime or fulltime equivalent employees, you must offer 95% of the eligible employees’ health insurance. If you even think you have an issue, better to get ahead of it than find out after the fine has accrued.