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As employers across the country continue to feel the impact of the COVID-19 Pandemic and work to comply with various state or local stay at home orders to combat the spread of the disease, employers have also been bombarded with information regarding the various workforce management tools at their disposal to keep their businesses alive during this crises.
Now that the March 31, 2020 1095-C & 1094-C electronic filing deadline is behind us, employers should consider how each of these different workplace management options can affect their ongoing ACA compliance. We previously discussed how the Covid-19 Pandemic could impact an employer’s ALE status in 2021, how the Rule of Parity can affect offers of coverage during temporary layoffs, and the different questions employers should ask themselves as they are considering workforce management solutions.
As a reminder to employers in conjunction with the Employer Shared Responsibility Payment (ESRP), the ACA’s Employer Mandate, employers with 50 or more full-time employees and full-time equivalent employees are required to offer Minimum Essential Coverage (MEC) to at least 95% of their full-time workforce (and their dependents) whereby such coverage meets Minimum Value (MV) and is Affordable for the employee or be subject to Internal Revenue Code (IRC) Section 4980H(a) penalties.
When trying to determine whether employees are considered to be full-time under the ACA, employers must use one of two measurement methods sanctioned by the IRS: the Monthly Measurement Method or the Look-Back Measurement Method.
As a general concern, many employers who had previously used the Monthly Measurement Method, may want to rethink their approach as they implement different workforce measures to adjust to the economic slowdown associated with the Covid-19 Pandemic. These types of workforce management measures often create a more variable-hour workforce.
If your workforce is primarily comprised of variable-hour workers, the Look-Back Measurement Method will be the best measurement method to use for ACA compliance .For more details on how the two measurement periods work, click here.
Furlough:
A furlough usually refers to a temporary unpaid leave. The employee still technically works for the employer but is not accruing hours of service. Employers should consider the following when evaluating the impact on their ACA compliance.
• How does this affect their tracking of hours of service and an employee’s status as full or part-time
• Does this affect the timing of their offers of coverage, including understanding the potential impact of the Rule of Parity
• How does this affect their monthly full-time counts
• How does this affect their future tracking of ALE Status
In addition, employers should be aware of the new leave requirements in the Families First Coronavirus Response Act, as it places restrictions on employers and expands access to paid leave for certain categories of employees impacted by the COVID-19 Pandemic.
Layoff/Terminations:
These are both permanent separations of employment. Employers should consider the following when evaluating the impact on their ACA compliance.
• How does this affect their monthly full-time count totals
• How does this affect their future tracking of ALE Status
• If the termination is temporary, does the Rule of Parity impact your obligations to offer coverage
In addition, employers should be aware of the Paycheck Protection Program included in the Stimulus package, as it offers forgivable small business loans to employers who keep employees on the payroll during the COVID-19 Pandemic.
Whether you’re running a restaurant, staffing agency, healthcare facility or some other organization, complying with the ACA on your own can be difficult, this is especially true today as employers utilize all of their workforce management options to deal with the economic challenges presented by the Covid-19 Pandemic. Consider outsourcing a third-party expert who specializes in ACA compliance, data consolidation and analytics to avoid the headache and focus your resources on bettering your business and managing through the Pandemic.
Your organization will want to get it right to avoid ACA penalties being issued by the IRS. Currently, the agency is issuing Letter 226J penalty notices to organizations identified as having failed to comply with the ACA’s Employer Mandate for the 2017 tax year. If you received one, learn how to respond with this helpful guide.
We’re committed to helping companies reduce risk, avoid penalties, and achieve 100% ACA compliance. For questions about the ACA contact us here.
