What You Need to Know About the Affordable Care Act and How Workforce Management Can Help

What You Need to Know About the
Affordable Care Act and How Workforce
Management Can Help
October 24, 2013 | Presented by Bob Clements and Amy Kozleuchar

©2013 Axsium Group, a division of Knightsbridge Human Capital Management Inc. All rights reserved.

Today’s Speakers
Bob Clements
Senior Vice President, Axsium Group
Email: bclements@axsiumgroup.com
Twitter: @robert_clements

Amy Kozleuchar
Senior Manager, Axsium Group
Email: akozleuchar@axsiumgroup.com


Healthcare Reform = Shifting Sands
$2,000 per employee penalty has been delayed
until January 1, 2015
Rollout of existing provisions has been bumpy and
government continues to clarify rules
Employers have to act and are acting, but need to be agile
to respond to changing requirements


Our Objectives

Define full-time employment

Explain the safe harbor processes
for calculating full-time status
Discuss tools that will help determining
the full-time status of your employees


Determining Full-time Status is Not as Easy as You Think


hours of service per week
(or 130 hours of service per month)

Each hour paid or entitled
to payment for:
 duties performed
 vacation
 holiday
 illness
 incapacity/disability
 layoff
 jury duty
 military duty
 leave of absence

Understanding the Basic Safe Harbor Process
Measurement Period
•

Between three and 12
consecutive months
(employer’s discretion)

•

•

•

A period of time an employer
uses to determine the full-time
status of its employees

•

Stability Period

Administrative Period
An optional period of time an
employer may use to
determine full-time status and
notify and enroll eligible
employees

•
•

May be referred to as lookback period, standard
measurement period or initial
measurement period

May last up to 90 days
Overlaps with prior stability
period to avoid gaps in
healthcare coverage

Not all employees need to follow the same cycle.
Employers can use different period lengths for different
categories of employees.

•

•

At least six months and no
shorter than the measurement
period

•

The period of time during
which an employee is treated
as full-time (or not) eligibility
during pervious measurement
period.

Period lengths cannot be changed until a new cycle (the
measurement period) starts.

This process repeats and overlaps in perpetuity.

Our Scenario for Today

Party Shop
1. Party supply retailer with more than
12,000 employees
2. Headquartered in Miami, Florida
3. 100 employees at corporate

4. 250 stores across southeast
5. Each store has 50 employees year-round
and hires seasonal staff the holiday
season
6. Salaried and hourly staff
7. Distribution Center in Georgia employs
50 people
8. Manufacturing facility in Texas has 100
employees


Party Shop’s Safe Harbor Parameters

Measurement

Administrative

Stability

Florida, Georgia, North
Carolina, South Carolina

6 mo.

1 mo.

6 mo.

Texas

12 mo.

1 mo.

12 mo.

Initial Measurement Period Start on June 1, 2013


Party Shop’s Plans Comply with IRS Rules



Measurement periods are not
less than three months and not
greater than 12 months




Administrative periods are not
more than 90 days and these
periods overlap the previous
stability period



Stability periods are at least six
months and are not shorter than
the measurement period

Party Shop’s Plans Comply with IRS Rules
2013
F M A M J

J

2014
A S O N D

J

F M A M J

J

2015
A S O N D

J

F M A M J

J

2016
A S O N D

J

F M A M J

J

A S O N D

Hired on 3/3 and initial measurement period begins

Transitions to on-going employee when next standard measurement period begins



Measurement periods are not
less than three months and not
greater than 12 months




Administrative periods are not
more than 90 days and these
periods overlap the previous
stability period



Stability periods are at least six
months and are not shorter than
the measurement period

J

Calculating Hours of Service in the First 6-month Cycle

Beth is an hourly
employee in the
Florida corporate
office.
During the 6/1/2013-11/30/2013 measurement
period:

Jeff is an hourly
employee in a
Georgia store.
period:

• Beth worked 932 hours

• Jeff worked 719 hours

• Beth took 40 hours of paid time off (vacation)

• Jeff was called for jury duty two days and
received 16 hours of jury duty pay

• (932 + 40) / 26 = 37.38 average hours per
week
• Beth is considered full-time for the stability
period 1/1/2014-6/30/2014

• (719 + 16) / 26 = 28.26 average hours per week
• Jeff is not considered full-time for the stability
period 1/1/2014-6/30/2014

Calculating Hours of Service in the First 12-month Cycle

Lisa is an hourly
employee in the
Texas manufacturing
facility.
period:

Dan is an hourly
employee in the
Texas manufacturing
facility.
period:

• Lisa worked 1,502 hours

• Dan worked 1,759 hours

• Lisa took 20 hours of paid time off (sick)

• Dan took 80 hours of paid time off (vacation)

week

week

• Lisa is not considered full-time for the stability
period 7/1/2014-6/30/2015

• Dan is considered full-time for the stability
period 7/1/2014-6/30/2015


Confirming Hours of Service in Subsequent 6-mo. Cycles

Beth is an hourly
employee in the
Florida corporate
office.
period:
• Beth worked 756 hours

Jeff is an hourly
employee in a
Georgia store.
period:

• Beth took 16 hours of paid time off (sick)

• Jeff worked 980 hours and he did not have any
paid time off during this measurement period

• (756 + 16) / 26 = 29.69 average hours per week

• 980 / 26 = 37.69 average hours per week

• Beth was previously full-time, but based on
this measurement period she is not considered
full-time for the next stability period.

• Jeff was previously not considered full-time,
but he will be considered full-time for the next
stability period


Verifying Hours of Service in Subsequent 12-mo. Cycles

Lisa is an hourly
employee in the
Texas manufacturing
facility.
period:

Dan is an hourly
employee in the
Texas manufacturing
facility.
period:

• Lisa worked 1502 hours

• Dan worked 1343 hours

• Lisa took 60 hours of paid time off (vacation)

• Dan took 12 weeks of FMLA leave

week

• 1343 / 40 = 33.57 average hours per week

• Though previously not considered full-time,
Lisa will be considered full-time

• Even though Dan was on unpaid leave during
this measurement period, it does not count in
his average hours. Dan is considered full-time

Determining Eligibility for a New Hire in 6-month Cycle

Logan is a newly hired hourly employee,
expected to work more than 30 hours per week for Store #12.
2014

2013
J

J

A

S

O

N

D

J

F

M

A

M

J

2015
J

A

S

O

N

Hired on 2/5
Completed 30 days of service on 3/7

Initial coverage period begins on 4/1
Reassessed with 6/1-11/30 measurement period


D

J

F

M

A

M

Establishing Status for a New Hire with 6-month Cycle

Colby is a recently hired at Store #37
and is expecting to work between 10 and 37 hours per week.
2014

2013
J

J

A

S

O

N

D

J

F

M

A

M

J

2015
J

A

S

O

Hired on 2/5
Initial measurement period


N

D

J

F

M

A

M

Calculating Average Hours for a New Hire with 12-mo Cycle

Allison is a new hire and expected to work 20-40 hours per week
in the Texas manufacturing facility.
2013
J

J

2014

A S O N D

J

F M A M J

J

2015
A S O N D

J

F M A M J

Hired on 2/5

Initial measurement period


J

2016
A S O N D

J

F M A M J

J

2017
A S O N D

J

F M A M

Finding the Data to Establish Full-Time Status
What is the best source of data for hours of service?
(Payroll, Time Keeping/Workforce Management, HR, or Data Warehouse?)

Best Practice #1: Establish repeatable process for retrieving
and calculating full-time status

Best Practice #2: Ensure process is flexible,
allowing for changes in IRS definitions


Using “Guardrails” for Consistency, Compliance and Cost

Two challenges:
1. Prevent “fulltime drift”
2. Maximize fulltime hours

Best practices to address these challenges:
• Use automated scheduling system to generate schedules
• Constrain schedule edits to drive good practices
• Establish flash reports, exception reporting and alerts to
identify potential issues before they occur


Resources to Help You
• Internal Revenue Code 4980H. Shared responsibility for employers regarding
health coverage.
•

http://www.gpo.gov/fdsys/pkg/USCODE-2011-title26/pdf/USCODE-2011-title26subtitleD-chap43-sec4980H.pdf

• IRS Notice 2011-36. Request for Comments on Shared Responsibility for
Employers Regarding Health Coverage (Section 4980H)
•

http://www.irs.gov/pub/irs-drop/n-11-36.pdf

• IRS Notice 2012-17. Frequently Asked Questions from Employers Regarding
Automatic Enrollment, Employer Shared Responsibility and Waiting Periods
•


• IRS Notice 2012-58. Determining Full-Time Employees for Purposes of Shared
Responsibility for Employers Regarding Health Coverage
•


• IRS Notice 2012-59. Guidance on 90-day Waiting Period Limitation Under
Public Health Service Act
•


• Continuing to Implement the ACA in a Careful, Thoughtful Manner
•


http://www.treasury.gov/connect/blog/Pages/Continuing-to-Implement-the-ACAin-a-Careful-Thoughtful-Manner-.aspx

5 Ws of HCM
Shifts

Workforce

Geographical
Allocation

Skillsets

Payroll

Attract, retain, develop, promote the right workforce to
flexibly meet business goals
www.infor.com

22

Key to a Solid HCM Strategy
Transform the way people and organizations perform and unify any
content, process, software, service and device … to raise Return on
Capability

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23

For More Information
• For a free ROI calculation, copy of today’s slides, recording link, pricing or
additional product information: Look for email next 24 hours from
wcook@enwisen-hr.com to make request
• Upcoming webinars and events: www.enwisen.com and infor.com
•
•
•
•
•
•
•
•

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Evanta HR Leadership Summit Washington DC – Nov. 21
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