June 21, 2013

How to classify temporary employees under the ACA

Today's guest post is brought to you by Zack Pace, Senior Vice President of Benefits Consulting at CBIZ, Inc. Zack can be reached at ZPace@cbiz.com.

I recently co-authored a piece with Rebecca Barnes-Hogg for ASAE: The Center for Association Leadership about the importance of correctly classifying employees under the Affordable Care Act.

In the article, I explained there are four categories of employees the ACA recognizes -- full time, seasonal, variable hour, and part time. For employers with 50 or more full-time employees and full-time equivalents, failure to correctly classify employees could trigger the “no coverage” penalty of $2,000 per all full-time employees less the first 30 employees.

If your organization has temporary employees, these four steps will help identify and reclassify these employees to eliminate the penalty risk.

Step 1: Identify your current temporary, non-benefit-eligible employees, such as interns, seasonal hires, and temporary workers, who supplement your workforce or assist in the completion of a project.

Step 2: Run reporting that displays their hours worked per month over the past 12 months. Flag any employees who averaged 30 hours during the total time period or within the first six or last six months. Flag any temporary employees who worked 130 hours or more in any given month. These flagged employees could be considered full-time under ACA.

Step 3: Categorize your temporary employees into the four ACA available classifications and evaluate the impact of these changes. See the graphic below for the classifications breakdown.

Step 4: Based on your policy decisions, amend your handbook, policies, and health-plan documents, including insurance contracts, and communicate these changes to employees.

Step 5: When hiring new employees, ensure they are placed in one of these four categories and administered accordingly.

Hopefully these steps were helpful in eliminating the risk of triggering the “no coverge” penalty. In order to completely understand the different employee categories, as well as how to categorize your temporary employees, check out the full article, available here.

Please read earlier posts for additional answers to questions about the Affordable Care Act

Portions reprinted with permission. Copyright ASAE: The Center for Association Leadership, April 2013, Washington, DC.

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