The ACA Paradigm Shift - Employee Status
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Confession time: I’m a computer game geek. That may not surprise you. After all, if I can geek out to ACA regulations, I clearly fit into the computer gamer world too, right? Or, does that indicate a need for a psychiatrist? I don’t know. Anyhow, when I get into a game, I typically really get into it. I like games with a lot of depth and nuance. It’s just part of my personality – while a good hand of solitaire is okay, it’s not chess. I do this because it’s a fun distraction and hopefully, by really diving deep, I can figure out how the programmers put the game together. More importantly, how they intended for me to experience the game – that way, I can enjoy it the way it was meant to be enjoyed.
Taking that same approach with the ACA yields some definite shifts in perspective regarding how the drafters envisioned employers dealing with their employee health benefits. I’m not talking about the mandates – those are more along the lines of outright changes to the tax code (which is exactly what the Individual Mandate is, according to the Supreme Court.) No, I’m talking about more subtle things. One change that affects all “large” employers (50 or more full-time equivalent employees) is the concept of an “ongoing employee.”
We’re used to identifying employees as full-time, part-time, hourly, salaried, internal, contingent, external, etc. From time immemorial that’s how employees have been categorized with relation to health benefits. Starting in 2015 that’s going to change. All employees, regardless of what they do and how you’ve classified their position, are going to become ongoing employees – which is defined as an employee who has been employed through one standard measurement period. Employees may be hired as “full-time” but they’ll only stay that way for a year. You may have a number of variable hour or seasonal employees – they may retain that designation for longer depending on circumstances, but if they remain employed long enough, they’ll become ongoing as well. Part-time? Only in the first year – then they are ongoing.
Why is this important? It takes the eligibility for health benefits away from a person’s position, seniority, their spot on the org chart, etc., and leaves it with their status as an employee and the amount of hours they worked during the ongoing stability period. I get asked a lot about how to carve employees out or set up eligibility conditions once the employer mandate begins. The answer of “you don’t” doesn’t really ring with everyone at first – you need to get the paradigm shift the government’s laid out for us. If you’re still in this mode – figuring out how to segregate parts of your population – it’s time to dive deeper and see where they’re leading us. Next year, you’ll have ongoing employees – that means you’ll need to track hours of service for everyone, and measure everyone. A subtle change, but one that has big implications! Check out our webinar recording for more tips on calculation employee hours.
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