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Obamacare Q & A: Must Offer ‘Affordable’ Coverage

Our guest blogger, Matt Lapointe, helps to explain the ‘Affordable’ concept in the Affordable Care Act (ACA).  Matt Lapointe, is an attorney with Wetherington Hamilton, P.A. in Tampa, FL,  www.whhlaw.com.  Matt advises small and mid-size businesses on all areas of business law, including the ACA.

Q.  I own 5 Dunkin’ Donuts franchises. Each is in a separate LLC, but I know they must be grouped together for ObamaCare purposes under the aggregation rules you discussed in Part 1 of ObamaCare Q & A.  I offer health coverage to all my full-time employees, but I heard that I could still get fined if the coverage I offer is not affordable to my employees.  How does the ACA define “unaffordable”?

A.  Health insurance coverage is deemed “unaffordable” if the premium required to be paid by the employee exceeds 9.5% of the employee’s household income.  Recognizing that an employer has no way of knowing the “household” income of its employees, the regulations allow affordability to be determined on the basis of the employee’s own income as reported on his or her Form W-2 (in Box 1) instead of household income.  If any employee’s share of the premium exceeds 9.5% of her W-2 reported income and any employee obtains subsidized coverage from the ObamaCare exchange, then the company must pay a penalty of $250 per month ($3,000 per year) multiplied by the number of full-time employees who obtain subsidized coverage from the exchange.

We’ve mentioned our new ACA-ALE Status report that calculates by month the total number of full-time and full-time equivalent employees to determine if your company must comply with the ACA. ACA FT Status

Our other new ACA report, ACA: FT Status – Monthly, breaks down each employee’s hours by the month to point out which employees meet the full-time (FT) status according to the ACA 130-hours per month ruling.

(These new ACA reports are coming out with our next update.)

We would like to thank Matt again for his time as a guest blogger in this series and for his assistance in creating our new ACA reports. As we’ve mentioned before, the Chronotek staff does not have ACA experts and therefore cannot answer compliance questions. Feel free to contact Matt.  We may hear from Matt again. Please stay up to date by subscribing to our blog or follow us on Facebook or Twitter.

 

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