By Danielle Capilla
Chief Com­pli­ance Offi­cer at Unit­ed Ben­e­fit Advisors

employeesThe Patient Pro­tec­tion and Afford­able Care Act (ACA) requires applic­a­ble large employ­ers (ALEs) to offer full-time employ­ees health cov­er­age, or pay one of two employ­er shared respon­si­bil­i­ty penal­ties. An ALE is an employ­er with 50 or more full-time or full-time equiv­a­lent employ­ees (for 2015, this thresh­old is 100). A full-time employ­ee is an employ­ee who works 30 hours or more a week.

Leaves of absence can make it dif­fi­cult for an employ­er to deter­mine if or how an employ­ee counts toward the ALE thresh­old of 100, as well as deter­min­ing if an employ­ee is con­sid­ered full time and must be offered coverage.

Under the ACA, any hour for which an employ­ee is paid or enti­tled to pay­ment must be count­ed as an hour of ser­vice. This includes:

  • An hour worked
  • Vaca­tion
  • Hol­i­day
  • Sick time
  • Inca­pac­i­ty (includ­ing disability)
  • Lay­off
  • Mil­i­tary duty
  • Paid leave

Excep­tions to the rule exist for:

  • Hours worked by a stu­dent as part of the Fed­er­al Work-Study Pro­gram (or a sim­i­lar state or local program)
  • Hours which are con­sid­ered income from sources out­side the Unit­ed States
  • Hours per­formed as a “bona fide volunteer”

For hourly employ­ees, an employ­er must count actu­al hours worked or paid.

For employ­ees who are not paid hourly, an employ­er must use any of these three methods:

  • Count­ing actu­al hours worked or for which vaca­tion, hol­i­day, etc. are paid
  • Cred­it­ing an employ­ee with eight hours’ work for each day for which the per­son was paid for at least one hour of work, vaca­tion, hol­i­day, etc.
  • Cred­it­ing an employ­ee with 40 hours’ work for each week for which the per­son was paid for at least one hour of work, vaca­tion, hol­i­day, etc.
  • An employ­er using a cred­it­ing sys­tem must be care­ful not to under­es­ti­mate an employ­ee’s hours. For instance, an employ­er may not use the eight hour method for an employ­ee who works 10 hours a day, three days a week.

As a gen­er­al rule, if an employ­ee ter­mi­nates employ­ment or is ter­mi­nat­ed from employ­ment (not a lay­off) and is rehired with­in 13 weeks (26 weeks for indi­vid­u­als work­ing for an edu­ca­tion­al insti­tu­tion), or has unpaid non-FMLA (Fam­i­ly and Med­ical Leave Act) leave and returns to work with­in 13 weeks, the employ­ee’s sta­tus as either full-time or non-full time must be rein­stat­ed, and he or she can­not be treat­ed as a new hire, sub­ject to a wait­ing peri­od. Cov­er­age must resume by the first of the month on or fol­low­ing the date the employ­ee returns to work.

Request UBA’s ACA Advi­sor, “Per­fect Atten­dance! How to Han­dle Leaves of Absence under the ACA” for com­pre­hen­sive help with:

  • Meth­ods for count­ing hours to deter­mine full-time sta­tus (includ­ing edu­ca­tion­al institutions)
  • FMLA, USERRA, and jury duty
  • Unpaid leave
  • Lay­offs
  • Dis­abil­i­ty
  • Con­vey­ing policies
  • Deter­min­ing ALE status
  • Cred­it­ing hours to employees

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