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The Temporary Employee Classification... Gone with the ACA Wind

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Does your organization employ temporary employees who are not employed through a staffing agency or who are not true independent contractors? If so, you have some
work to do. Under the Affordable Care Act (ACA), the temporary employee classification does not exist. This article covers the four categories of employees that the ACA does recognize and how to reclassify your temporary employees.

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Transcript of "The Temporary Employee Classification... Gone with the ACA Wind"

  1. 1. Step 2: Run reporting that displays their hours worked per month over the past 12 months. Flag any employees who averaged 30 hours during the total time period or within the first six or last six months. Flag any temporary employees who worked 130 hours or more in any given month. These flagged employees could be considered full-time under ACA. Step 3: Categorize your temporary employees into the four available ACA classifications and evaluate the impact of these changes. See the graphic below for the classification breakdown. Step 4: Based on your policy decisions, amend your handbook, policies and health-plan documents, including insurance contracts, and communicate these changes to employees. Step 5: When hiring new employees, ensure they are placed in one of these four categories and administered accordingly. Take caution in your reclassification efforts, and please note that there may be other legal implications to your current temporary employee definition and administration. Portions reprinted with permission. Copyright ASAE: The Center for Association Leadership, April 2013, Washington, DC. I D E A S T O H E L P G R O W Y O U R B U S I N E S S ©Copyright2013.CBIZ,Inc.NYSEListed:CBZ.Allrightsreserved. D oes your organization employ temporary employees who are not employed through a staffing agency or who are not true independent contractors? If so, you have some work to do. Under the Affordable Care Act (ACA), the temporary employee classification does not exist. The ACA recognizes only four categories of employees: 1. Full-time (30 hours per week or 130 hours in any given month) 2. Seasonal 3. Variable Hour (hourly employees who may work more or less than 30 hours per week) 4. Part-Time (always working less than 130 hours per month) Why is this reclassification important? Beginning in 2015, if an employer with 50 or more full-time employees or equivalents does not offer health insurance benefits to 95 percent or more of its full-time employees and at least one full-time employee goes to an exchange and qualifies for premium assistance, then the employer’s annual penalty could be $2,000 per all full-time employees less the first 30 full-time employees. Thus, this penalty could be triggered if any of your temporary employees will be considered full-time. If your organization has temporary employees, follow these five steps to identify and reclassify these employees to eliminate the risk that they will trigger the $2,000-per-employee penalty. Step 1: Identify your current temporary, non-benefit-eligible employees, such as interns, seasonal hires and temporary workers, who supplement your workforce or assist in the completion of a project. our business is growing yours Health Care Reform The Temporary Employee Classification… Gone with the ACA Wind Article reprinted from Fall 2013GROWTHBIZS T R A T E G I E S FULL-TIME: Extending health plan eligibility to temporary employees who are reclassified as full-time will prevent these employees from triggering the $2,000 penalty. Calculate their projected enrollment and impact to your budget. Is this cost increase acceptable? If not, can you make compliant policy changes to reclassify these employees as part-time? For example, can you compliantly limit their monthly hours to 125? SEASONAL: Seasonal employees can be excluded from your group health plan. The final ACA definition of seasonal is pending. For planning purposes, consider employees with strong seasonality and employment durations of less than 121 days as seasonal. For example, if you hire interns only in the summer and for 90 days or less, they will likely be classified as seasonal. However, if you hire interns throughout the year, the position is not dependent on seasonality. Any seasonal employees should be tracked similarly to variable hour employees. VARIABLE HOUR: For hourly employees who may or may not work 30 hours per week, you can track their hours for up to 12 months before establishing their eligibility. PART-TIME: If you are able to classify temporary employees as part-time (never working 130 hours or more in a given month), these employees will not impact the $2,000 “no coverage” 2015 employer penalty. THE FOUR ACA EMPLOYEE CLASSIFICATION CATEGORIES ZACK PACE CBIZ, Inc. • Columbia, MD 443.259.3240 • zpace@cbiz.com CO-AUTHOR: Rebecca Barnes-Hogg of YOLO Insights

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