Affordable Care Act (“ACA”) compliance remains a complicated process for most employers. Starting January 1, 2015, Applicable Large Employers (“ALEs”) become subject to the Employer Shared Responsibility Provisions of the ACA, codified in Internal Revenue Code Section 4980H. ALEs must offer their full-time employees the opportunity to enroll in affordable health coverage providing minimum essential benefits under an eligible employer sponsored plan (as defined in 26 U.S.C. § 5000A(f)(2)) for any month.
Three may have been the magic number back on Schoolhouse Rock, but under the ACA, 50 is the magic number. An ALE is defined under Section 4980H(c)(2)(A) as an employer who employed an average of at least 50 full-time employees on business days during the preceding calendar year. For employers who rely upon seasonal help, Section 4980H(c)(2)(B) exempts an employer from ALE classification if an employer’s workforce exceeds 50 full-time employees for 120 days or fewer during the calendar year, and the employees in excess of 50 during those 120 days were seasonal workers.
Compliance with these requirements requires a complicated calculus to define full time equivalent employees, hours worked, and the definition of “affordable” health coverage. The increased costs of compliance, in addition to the projected costs to provide employee coverage, have impacted hiring in New York.
According to a recent poll conducted by the Federal Reserve Bank of New York, fourteen percent of services firms and factories in New York reported hiring fewer full-time workers and more part-timers or contract employees in response to the ACA. The Fed did not ask employers if they cut jobs as a result of the ACA. The survey also revealed that seven percent of plans reported using more contract workers, while one percent of service firms did. Part-time hires rose five percent at factories and thirteen percent at service companies. Surprisingly, only one percent of factories and six percent of service firms reported cutting employees’ work hours.
Firms seeking to navigate the ACA’s murky waters should contact health care counsel with any questions.