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Advice on Affordable Care Act?

Question: I know you’re an expert in franchise law, but can you give me some advice on the new Affordable Care Act?

Answer: Absolutely.  The employer mandate portions of the Affordable Care Act will become effective on January 1, 2014, but some provisions went into effect January 1, 2013!  If you filed more than 250 W-2s in 2011, beginning in January 2013, you must report the cost of any health care you provide to your employees for “informational reporting purposes.”

Let’s start with some of the basics of the ACA.  First, you will be required to “offer” to your full-time employees “minimal essential coverage” if you have more than 50 full time equivalent (FTE) employees.  “Full time” under the ACA is an employee who works 30 hours or more per week.  However, in order to determine whether you are required to offer “minimal essential coverage” to your full time employees, you must aggregate all part-time and full-time employees.  An easy example is that if you have 25 employees who work more than 30 hours per week on average and 50 employees who work 15 hours per week on average (part-time employees), you have reached the magical 50 FTE threshold that will require you to offer “minimal essential coverage.”  Further, in order to get to the 50 FTE threshold, all of your affiliated companies will be aggregated.  If your companies have a common ownership structure, they will be aggregated for purposes of determining the 50 FTE threshold for determining whether you need to offer “minimal essential coverage” to your full-time employees. 

If you have more than 50 FTEs, then you will be required to offer “minimal essential coverage” to your full-time employees, those who provide 30 or more hours of service per workweek.  A full-time employee’s wage rate or salary scale does not matter, nor are the hours or service equal to the hours worked.  So, a salaried manager who is scheduled to work 28 hours per week but comes in to do clean up a few hours per week, makes this person a full time employee, even though the employee is only being paid for 28 hours.  And a dishwasher making minimum wage who performs more than 30 hours of service for the employer is covered as well. 

I use “minimal essential coverage” in quotes because it has not been determined yet what this means, as the final regulations have not been issued.  Stay tuned.  We will be presenting at the MRA’s Health Care Mandate Seminar on February 19, 2013!

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At Fahey Schultz Burzych Rhodes PLC, we’ve been helping municipalities, franchised businesses, employers, and more with their legal needs since 2008. We’d love to learn how we can help you, too.