Who Is A Full Time Employee Under The New Healthcare Act

If  you've been listening to the news the last couple of days, you've probably heard that the owners of Lobster House and the Olive Garden are changing some employees to part time workers vs. full time to save costs on the reformed healthcare laws.  Think we will see more of this as the days go forward and businesses need to see how adaptations can affect their bottom lines both positively and negatively.     

If you are in a position of reviewing who is full time and/or part time you may benefit from this article written and posted by Tina Bull on October 9th, 2012 in the PSA Perspective, by  PSA  Insurance and Financial Services.  

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"The Affordable Care Act (ACA) requires employers with 50 or more full-time equivalent employees to offer affordable, valuable minimal essential coverage to all full-time employees or pay a penalty. This requirement is referred to as the employer shared responsibility requirement and is effective January 1, 2014.

ACA defines a full-time employee as one who has an average of at least 30 hours of service per week. Proposed regulations are expected to provide that 130 hours of service in a calendar month will be treated as the monthly equivalent of 30 hours of service per week.

The IRS has issued Notice 2012-58 to describe safe harbor methods an employer may use to determine if current employees and new “variable hour” employees must be treated as full-time employees for purposes of the shared responsibility requirement. An employee may be considered a “variable hour” employee if, based on facts and circumstances, it cannot be determined that the employee is reasonably expected to work on average at least 30 hours per week.

Ongoing Employees

For an ongoing employee (i.e. an employee who has been employed at least one standard measurement period as described below), full-time status may be determined under the safe harbor by calculating the employee’s actual average weekly hours of service during a specified look back period. This specified period is referred to as the standard measurement period and is a defined length of time between three and 12 consecutive calendar months.

If the employee averaged 30 or more hours of service per week during the standard measurement period, then health coverage must be offered to that employee during a subsequent stability period (of at least six months and no shorter than the standard measurement period). This coverage is provided to the employee for the entire stability period without regard to the number of hours of service the employee has during the stability period. However, another measurement period will commence for purposes of determining whether health coverage must be offered during the next stability period.

Between the measurement period and the stability period, an employer may use an administrative period of up to 90 days to notify and enroll eligible employees.

Employers will likely establish a standard measurement period immediately preceding annual open enrollment, an administrative period that coincides with open enrollment, and a stability period that matches the plan year. This means that the first standard measurement period may start as early as October 2012.

New Employees

For new variable hour and seasonal employees, the safe harbor method is similar. However, the initial measurement period and the administrative period combined cannot extend beyond the last day of the thirteenth full calendar month of employment. The initial stability period must be the same length as the stability period for ongoing employees.

In addition, certain hours of service during the initial measurement period will also be counted toward the next standard measurement period that begins after the new employee’s date of hire. A variable hour employee who is determined to be full-time during the initial measurement period must be offered coverage during the full initial stability period, regardless of the average number of hours of service during the first standard measurement period.

If a new employee is reasonably expected to work full-time at the date of hire, then the safe harbor method for variable hour and seasonal employees does not apply. The employee must be initially classified as full-time and coverage must be offered to the employee at or before the conclusion of the employee’s initial three calendar months of employment.

Reliance and Comments

Employers may rely on the safe harbors for measurement periods that begin through 2014 and related stability periods that may extend into 2016. The IRS has asked for comments on the following: other safe harbors for categories of employees that present special issues, other guidance that may be needed to determine full-time status, measurement/stability period issues during a merger or acquisition and how seasonal worker should be defined.

While the safe harbor methods are optional and may be administratively challenging for employers, use of them will provide certainty that an employer will not be subject to the ACA penalty for failing to offer coverage to all or substantially all full-time employees."
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Future Of Medigap

Came across a question recently pertaining to the future of medigap policies under the new healthcare law.  Something very interesting to be aware of.  Read on and pay attention to the "good" reasons for lessening the full coverage terms of some medigap plans. Think you'll be as amazed as I. Here is the question as found in Kaiser Health News: 

Q. How will the new health law affect Medigap policies? I’m on Medicare with a Medigap Plan F. Premiums are rising 20 percent a year. It’s a real strain for me.

A. The health care overhaul doesn’t make any immediate changes to Medigap policies, but it sets the stage for potential changes to Plans C and F in 2015.

One in five Medicare beneficiaries has a Medigap policy to supplement their coverage under the traditional Medicare program. The standardized policies, which are identified by letters, cover coinsurance, deductibles and services not covered by Medicare to varying degrees.

Plan F and Plan C are the most popular Medigap plans, chosen by nearly two-thirds of beneficiaries. Those are also the policies that provide significant "first dollar" coverage: they pay the deductibles for both the hospital and outpatient portions of the traditional Medicare program (Parts A and B) as well as the 20 percent coinsurance required for doctor visits, and cover other services as well. People with these supplemental plans may pay virtually nothing for medical services beyond their premiums.

And that has policymakers concerned. If people don’t have to pay anything out of pocket for doctor visits and other medical care, there’s no financial incentive to get only the care they really need. Studies have shown that people get less medical care when they have to make some sort of financial contribution, though they skimp on both necessary and unnecessary care.

A 2009 study conducted for the Medicare Payment Advisory Commission found that medical costs for people with Medigap policies were 33 percent higher than the costs of beneficiaries without supplemental insurance.

"So the thinking has been that if you prohibit first dollar coverage and require some cost sharing when beneficiaries see a physician, it might encourage them to see the physician only when they need to," says Gretchen Jacobson, a principal policy analyst with the Program on Medicare Policy at the Kaiser Family Foundation. (KHN is an editorially independent program of the foundation.)

There have been a number of proposals put forward in recent years that would reduce Medigap coverage in some policies and require beneficiaries to pay more. To date, nothing has changed.

But the health care overhaul opens the door to changes in the future. Under the law, the National Association of Insurance Commissioners is required TO evaluate the benefit packages of Plans C and F with an eye toward adding nominal cost sharing by 2015.

Even if that happens, however, it’s unclear whether it would affect you or other current policyholders, says Jacobson.  "The changes might only apply to new policyholders," she says.

By Michelle Andrews
Kaiser Health News