HR Management & Compliance

Handling Curveballs and the Affordable Care Act

Senior legal editor at BLR®, Jennifer Carsen, JD, explores scenarios where a solid Affordable Care Act (ACA) plan might be pitched a curveball.

So, you think you’ve got a pretty good handle on this whole Affordable Care Act (ACA) thing. You know that you’re an applicable large employer (or ALE—and that “ALE” isn’t merely that thing you want to drink a lot of after a day of filling out ACA paperwork).

Yes, sir (or ma’am)—you’re in pretty darn good shape indeed! And kudos to you for it.

But what still throws a monkey wrench into the works is when an employee’s status changes—which, if you’ve been in HR for longer than 8 minutes, you know happens all the time:

  • Your star seasonal employee gets bumped up to full-time, year-round status.
  • A longtime full-time employee drops down to part-time.
  • Someone leaves … but then comes back.
  • And so on.

For even the most ACA-savvy HR professional, it’s enough to make you want to cry into your ale.

But help is here. Read on for our Plain-English translation of the change-of-status rules under the ACA for three common scenarios.

Scenario #1

Employee moves from seasonal, part-time, or variable-hour status to full-time status during the initial measurement period.

Steve the ski instructor is a superstar. At some point during his initial 12-month measurement period, you decide to hire him on as a full-time year-round employee; he will run your beach grill during the off season. ACA impact?

In general, if a seasonal, part-time, or variable-hour employee moves to a full-time position during the initial measurement period, you have until the earlier of these two dates to offer the person qualifying health coverage:

  1. a) The first day of the fourth full month following the change in status or
    b) The first day of the first month following the initial measurement period, plus any applicable administrative period, if the employee averaged 30-plus hours per week during the initial measurement period

Scenario #2

Employee moves, during a stability period, from full-time status to part-time status.

Lolly was hired as a full-time employee 2 years ago to boost your company’s widget sales. She has been fantastic, and widget sales are up 184%, but Lolly has just informed you that she wants to drop down to part-time in order to better care for her aging Siamese cat, Sammy. Because you don’t want to lose Lolly, you agree to this change. Lolly is currently in a stability period. ACA impact?

If Lolly qualified as full-time under the ACA during the prior applicable measurement period, she is generally considered full-time for ACA purposes for the duration of the current stability period, even though her hours have now dropped to part-time levels.

However, if Lolly has been offered continuous ACA-qualifying coverage from at least the fourth month of her employment, her employer may apply the monthly measurement method within 3 months of Lolly’s status change if she averages less than 30 hours per week for each of the 3 months following that change.

This special rule is designed to help employers who play by the rules and offer appropriate coverage, so they are not stuck having to consider a part-timer like Lolly for full-time for ACA purposes for the entire duration of a potentially lengthy stability period.

Tomorrow, we’ll look at scenario number three.

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