A health reimbursement arrangement, or HRA, is a benefit plan you can offer to your employees to reimburse them for medical expenses that are not covered by an insurance plan. HRAs offer tax benefits, including the deductibility of contributions you make to your employees’ accounts. Since the Affordable Care Act (ACA) took effect, if you employed 50 or fewer workers, your ability to provide HRAs to your employees may have been limited. However, a law passed in December 2016 created a new type of HRA that you can offer if you do not provide group health insurance.
The 21st Century Cures Act allows “stand-alone” HRAs if the accounts meet funding and other requirements. These new HRAs allow you to help your employees pay for medical costs, such as the reimbursement of premiums for policies purchased on the healthcare exchange. In addition, the Act extends relief from the $100 per day penalty for prior arrangements that did not meet Affordable Care Act rules.
Please contact us for more information about this new employee benefit option. This discussion could be crucial given the uncertainty of future ACA rules.
It seems like a simple question: How many full-time workers does your business employ? But, when it comes to the Affordable Care Act (ACA), the answer can be complicated.
The number of workers you employ determines whether your organization is an applicable large employer (ALE). Just because your business isn’t an ALE one year doesn’t mean it won’t be the next year.
50 is the magic number
Your business is an ALE if you had an average of 50 or more full time employees — including full-time equivalent employees — during the prior calendar year. Therefore, you’ll count the number of full time employees you have during 2016 to determine if you’re an ALE for 2017.
Under the law, an ALE:
• Is subject to the employer shared responsibility provisions with their potential penalties, and
• Must comply with certain information reporting requirements.
A full-timer is generally an employee who works on average at least 30 hours per week, or at least 130 hours in a calendar month.
A full-time equivalent involves more than one employee, each of whom individually isn’t a full-timer, but who, in combination, are equivalent to a full-time employee.
If you’re hiring employees for summer positions, you may wonder how to count them. There’s an exception for workers who perform labor or services on a seasonal basis. An employer isn’t considered an ALE if its workforce exceeds 50 or more full-time employees in a calendar year because it employed seasonal workers for 120 days or less.
However, while the IRS states that retail workers employed exclusively for the holiday season are considered seasonal workers, the situation isn’t so clear cut when it comes to summer help. It depends on a number of factors.
We can help
Contact us for help calculating your full-time employees, including how to handle summer hires. We can help ensure your business complies with the ACA.
Count employees to avoid ACA penalties!
The IRS recently updated a web page explaining how to figure out if you’re an “applicable large employer,” or ALE. If you are, you may have to pay a penalty for not providing health insurance to your employees. For 2016, your business will generally meet the definition of an ALE if you employed an average of at least 50 full-time employees (including full-time equivalent employees) during 2015. A full-time employee for any calendar month is one who averages at least 30 hours of service per week or at least 130 hours of service during the month.