With the pandemic hitting the entire world, employers and employees are faced with a dilemma. From termination to reduced hours, the US is undergoing a particularly difficult time in history. The service industry has been hit the hardest and with the looming threat of ACA penalties, there is additional pressure on employers.
If you are an employer and are not sure which employees qualify for a health plan and what changes you are faced with given the circumstances, we’ve simplified it for you in light of furloughs and returning employees.
Coverage for Employees who are on leave or have been furloughed.
Although the IRS has not changed any of the ACA-related requirements that existed earlier, they have released a guide for employees who have been laid off or are on an extended leave.
If you have terminated a worker, you are not mandated to continue coverage after the contract has ended. However, if workers have not been terminated but have an unpaid status, the employer should make sure that ACA requirements are met. If an employee was working full-time through a stability period and has been furloughed, then they should be given coverage throughout the furloughed period. In fact, they will retain the status of a full-time employee during the furlough. This rule also applies to extended leaves.
If an employer offers COBRA coverage to their workers, they should know that they risk exposure to ACA’s tack hammer penalty. This is because COBRA coverage cost is to be taken care of by the employee and if they waive it in exchange for a PTC, a penalty will be triggered.
Coverage for Returning Employees
If an employee is on unpaid leave or furlough due to COVID 19, they will be subject to the same rules as those who are on a break in service. Of course, employers need to take the Standard Measurement Period and the rule of Parity into consideration. Both these rules have guidelines on how long the worker can be absent from work and if they return, will they be considered eligible as per the previous contract or will they be treated as a new hire.
Here are the two IRS rules you should know of:
- The 13 Week Rule
Employees who return to work after 13 weeks of furlough or leave can be treated as new hires. Although furloughed employees should have coverage during the furlough period, they can still be treated as new hires upon returning.
- Rule of Parity
If the employee’s break-in service is 4 weeks and more and the duration of the break is longer than the employment period they served prior to the break, they will be considered as new hires
We cover all your ACA Tracking information
We take into consideration all the IRS and when analyzing an employee’s coverage, this calculation is built in their employment history and ACA status history. We cater to both educational and non-educational institutions and have been dealing with the Affordable Care Act since it started. Contact us today and let us take care of your reporting needs while you focus on your business.