SALT LAKE CITY — Employers around the United States will soon be required to embrace new employment standards intended to bolster health care access to everyday Americans, particularly those currently not covered under employer health benefit programs. The new standards, however, may have unintended consequences for American families.
Starting Jan. 1, 2014, employers will be required to provide health care benefits to all employees who work more than 30 hours a week on average. The government, however, will be using data from 2013 to determine an individual's employment standing, which means many employers have already started trimming resources and hours for employees in an effort to be compliant with the law.
The new regulations, which were established under the Affordable Care Act, will expand health care coverage for American citizens. However, the law will alter the landscape of businesses around the nation, particularly as companies start cutting employee hours, hire contractors and take other steps to become compliant with the law.
And while Americans will arguably have more access to health care, the regulations are convoluted and difficult to understand for many. Nevertheless, all will be affected by the law starting in 2014, if not earlier. The following are some things you should know about the Affordable Care Act and how it will affect you.
In an effort to make health care more affordable for and accessible to every American, Congress has passed into law the requirement that all Americans must have essential health coverage starting Jan. 1, 2014. Individuals choosing to forego health insurance will be required to pay a penalty, which will be assessed on an individual's tax returns by the Treasury.
While all citizens are required to have minimum essential coverage, individuals who cannot afford coverage — required contribution exceeds 8 percent of household income — will be exempt from having coverage. Additionally, incarcerated individuals, persons living in the country illegally, individuals with a coverage gap of less than three months, individuals with income below the tax filing threshold and members of Indian tribes are also exempt.
Nevertheless, individuals are responsible for ensuring they're covered under minimum essential coverage, which includes:
- Government sponsored programs, such as Medicare, Medicaid, Children's Health Insurance Program coverage or coverage through Veterans Affairs.
- Employer-sponsored plans.
- Individual market plans.
- Other coverage designated as minimum essential coverage by the Dept. of Health and Human Services and/or the Treasury.
For those foregoing individual health coverage, an annual penalty will be assessed, which will be the greater of a flat dollar amount per individual or a percentage of the individual's taxable income. Any dependent under the age of 18, the penalty is half of the individual amount.
- The flat dollar amount per individual is $95 in 2014, $325 in 2015 and $695 in 2016
- After 2016, the flat dollar will be adjusted for inflation.
- The flat dollar penalty is capped at 300 percent of the flat dollar amount.
- The percentage of the individual's taxable income will be 1 percent in 2014, 2 percent in 2015 and 2.5 percent in 2016.
- After 2016, the individual's taxable income will be adjusted for inflation.
Under the Affordable Care Act, an employee working more than 30 hours per week on average is considered a full-time employee. Employers are required to at least offer health care coverage to all full-time employees and their eligible children; however, the employer is not required to offer health care coverage to the employee's spouse.
That coverage is limited to medical only and does not require employers to offer dental, life or disability. Employers can offer more coverage to an employee if they choose, but are not required under the law to do so. The employer must simply provide the minimum essential coverage.
All employees working under 30 hours on average are considered part-time employees and are required to purchase health care coverage. Prior to the Affordable Care Act, employees working between 30 and 36 hours a week could still be classified as a part-time employee, depending on the employer's rules. As a result, many workers around the country — including Utah — are seeing a significant decrease in hours allowed a week.
Earlier this year, the state of Virginia passed a law limiting all part-time employees to working no more than 29 hours per week. Other organizations have followed suit and have enacted similar rules.
All employees — full or part time — will be tracked under a standard measurement period. If a part-time individual works for two companies under the same parent company, that individual must remain under the 30 hours. For example, an employee working 14 hours at BYU and 20 hours at Deseret Book would technically be a full-time worker because both are owned under the same parent organization.
As a result, BYU or Deseret Book would be required to offer the individual health care coverage, even though the hours worked at each company is not more than 30. The Affordable Care Act, however, does not determine who is required to offer that employee health care benefits; it's for the two companies to work out.
Standard measurement period
As mentioned above, all hours worked by an employee will be tracked by the company's human resource department (this is where it gets tricky for employers). Because the Affordable Care Act takes effect Jan. 1, 2014, employers have already started the measurement period, which means hours worked in 2013 will determine full- or part-time status in 2014.
The measurement period lasts nine months, with a three-month administrative period following. If an employee averages more than 30 hours at the end of the measurement period, the employer is required to offer health care coverage, which will be determined during the administrative period. However, if the employee drops below 30 hours while covered, the employer is still required to offer the employee coverage until the end of the next measurement period.
If an employer knows that an employee will work more than 30 hours, it can offer benefits without having to wait for the measurement period to end. The measurement period has many nuances, however, and requires a discussion with your human resource department for an exact definition about how it works.
Editor's note: While this article is meant to provide information on the Affordable Care Act, there is no way it can be comprehensive. To fully understand how the law will affect you, check with your company's human resource department.