By Jennifer Carsen, JD, Senior Legal Editor
Earlier this year, we ran an article on managing employee status changes under the Affordable Care Act (ACA). I invited follow-up questions, and you delivered! Here are a few more tricky ACA status change situations (and answers) for you.
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Note that many ACA status-change questions can be very fact-specific, and consultation with experienced benefits counsel is always recommended.
Question #1
An employee who has worked full time for over a year changes status to a part time employee. We offer benefits during the stability period because she qualified during the prior measurement period. Eight months into the stability period, she returns to full time status. Do we measure her hours worked in the measurement period for coverage in 2017 or do we focus solely on the fact that she is now a full time employee and eligible for coverage? (Assuming, of course, she remains a full time employee.)
The answer to this question would turn on your applicable measurement periods and stability periods for ongoing employees. The beauty of the lookback method (if “beauty” could ever reasonably be applied to anything ACA-related!) is that it provides a degree of administrative simplicity when employees change categories—even more than once—during a given period.
In the situation you’ve described, the employee should continue to receive benefits during the current stability period because she qualified as full-time during the prior measurement period.
Going forward, you would then look at the number of hours worked in the new measurement period to determine whether the employee has the requisite number of hours to qualify as full-time under the ACA for that measurement period. If so, she would then be eligible for coverage during the subsequent stability period.
This answer assumes that only the employee’s hours are changing, not the job itself. If, for example, the employee is moving between one job that is measured using the lookback method and another that is measured using the monthly measurement method, or vice versa, the answer could vary.
Question #2
We have a per diem employee that had worked enough hours during the measurement period to be ACA eligible. She worked pretty steady and then took an unofficial leave of absence and didn’t work for a period of time. She stopped paying her premiums and after several certified mail requests for payment she failed to reimburse us and we termed her benefits and submitted to [Consolidated Omnibus Budget Reconciliation Act] COBRA. Well, she recently started working again and I’m not sure if I’m supposed to offer her benefits again? Only offer if she repays us what she owes?
It’s not entirely clear what you mean by “per diem” employee in this situation, or what your measurement period is, but I am going to assume that she was considered a full-time employee under the ACA and eligible for benefits.
Under the ACA, an employee who terminates and is then rehired may be considered a “new” employee only if he or she had a full break in service of at least 13 consecutive weeks (or 26 weeks for certain educational organization employers).
But an employee may be treated as “new” after a break of only 4 or more consecutive weeks, if that break is longer than the employee worked for you immediately prior—I am not sure if that applies in your situation.
I have set aside the issue of the employee’s prior nonpayment of premiums as that is entirely separate from the issue of whether or not she should be offered health coverage now. Consultation with counsel is recommended, as recouping money owed by employees (past or present) tends to be complicated, fact-specific, and legally risky.
Question #3
We have an employee who retired on August 31, 2016. This person elected COBRA. What are the codes that we use? 1H and 2C and then the dollar amount of the insurance premium the retired employee will pay?
For September through the remainder of 2016 this person would likely be coded on the 1095-C as 1H for line 14 (no offer of coverage) and 2A for line 16 (employee not employed during the month). The draft 2016 1095-C filing instructions are clear that 2C is not to be used in this situation: “Do not enter code 2C in line 16 for any month in which a terminated employee is enrolled in COBRA continuation coverage or other post-employment coverage (enter code 2A).”
You also ask about how to code the amount this former employee will be paying. The Employee Required Contribution amount is generally entered on line 15 of the 1095-C form. However, you fill out line 15 only if you use 1B, 1C, 1D, 1E, 1J, or 1K on line 14. Therefore, if you use 1H on line 14, you leave line 15 blank.
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Before joining CER in 2005, Ms. Carsen was a Legal Editor at CCH, Inc. and practiced in the Labor & Employment Department at Sidley & Austin, LLP in Chicago. She received her law degree from the New York University School of Law and her B.A. from Williams College. She is a member of the New Hampshire Bar Association. Questions? Comments? Contact Jen at jcarsen@blr.com for more information on this topic |
Jennifer Carsen, JD,is a Senior Legal Editor for BLR’s human resources and employment law publications, focusing on benefits compliance. In the past, she served as the managing editor of California Employer Resources (CER), BLR’s California-specific division, overseeing the content of CER’s print and online publications and coordinating live events and webinars for both BLR and CER.