The Affordable Care Act (the "Act") requires employers to determine full-time status for employees in order to determine if the employer is considered a large employer (50 or more full time employees) subject to the shared responsibility provisions, and also to identify those employees that must be offered minimum affordable coverage in order to avoid penalties under the Act (the shared responsibility provision).

A large employer under the Act is defined as an employer who employed an average of at least 50 full-time or full-time equivalent employees in the preceding year. Full-time equivalent employees are based on the aggregate hours of employees who are not full-time. A full-time employee is an employee who is scheduled to work at least an average of 30 hours per week. Full-time employees are the only employees considered when determining if an employer is subject to potential liabilities for failure to offer minimum affordable health insurance coverage.

Adjunct Faculty

Crediting hours of service is especially difficult for employees who are not paid based on hours but instead on performance of certain duties, such as adjunct faculty. The Act specified that an employer could use any "reasonable" method for determining hours for those employees whose hours were not tracked and were difficult to determine.

On February 12, 2014, the IRS issued guidance for crediting hours for adjunct faculty and provided one reasonable method that may be used for crediting adjunct faculty hours as follows:

• Credit 2¼ hours of service per week for each hour of teaching or classroom time. This method credits an additional 1¼ hours for other activities such as preparation and grading; and
• Credit one hour of service per week for each additional hour spent performing other duties outside the classroom (such as faculty meetings and required office hours).

Although further guidance may be issued, this guidance can be relied upon through the end of 2015. While employers may implement other reasonable methods based on facts and circumstances, caution is recommended in devising methods that may upon review by the government be deemed unreasonable and therefore not in compliance with the law.

Student Employees

Hours of service performed by students through the federal work study program or a similar state program are not counted for purposes of the Act. All other hours of service for which a student is paid are required to be counted for purposes of the Act.

Other Updates

Delay in Compliance with Affordable Care Act for Certain Employers

This IRS has delayed for one year (until the 2016 plan year) the mandate for employers to provide insurance for employers that employ between 50 and 99 full time or full time equivalent employees in 2014 if:

• The employer does not reduce the size of its workforce or reduce the hours of service of its employees between February 9, 2014 and December 31, 2014 in order to satisfy the conditions;
• The employer does not make material changes to any health coverage it currently offers; and
• The employer certifies that it is eligible for the transition relief.

We will keep you informed of further developments in this area. For assistance or questions related to the Affordable Care Act please contact your CBIZ MHM advisor.

Copyright © 2014, CBIZ, Inc. All rights reserved. Contents of this publication may not be reproduced without the express written consent of CBIZ. To ensure compliance with requirements imposed by the IRS, we inform you that-unless specifically indicated otherwise-any tax advice in this communication is not written with the intent that it be used, and in fact it cannot be used, to avoid penalties under the Internal Revenue Code, or to promote, market, or recommend to another person any tax related matter. This publication is distributed with the understanding that CBIZ is not rendering legal, accounting or other professional advice. The reader is advised to contact a tax professional prior to taking any action based upon this information. CBIZ assumes no liability whatsoever in connection with the use of this information and assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

CBIZ MHM is the brand name for CBIZ MHM, LLC, a national professional services company providing tax, financial advisory and consulting services to individuals, tax-exempt organizations and a wide range of publicly-traded and privately-held companies. CBIZ MHM, LLC is a fully owned subsidiary of CBIZ, Inc. (NYSE: CBZ).