Come next month, the Affordable Care Act’s (ACA) health-care reporting provision for businesses with 50 or more full-time employees kicks in.
Experts say operators must be certain if they fit into the category of Applicable Large Employer (ALE) or Small Business.
“The law combines companies with a common owner to determine whether they collectively employ at least 50 full-time employees,” says Melanie Goodwin-Nyantakyi, a benefits consultant at TriNet, of ALEs. “If the combined total meets that threshold, then each separate company is an ALE subject to the ACA’s Employer Shared Responsibility provisions.”
An ALE has no choice but to provide health-care coverage, says John McGowan, attorney at BakerHostetler LLP, who specializes in ACA provisions. “Now operators in the service industry have to think of their employees as, unfortunately, interchangeable parts,” he says.
Operators with fewer than 50 employees may still be able to enroll in the Small Business Health Options Program (SHOP), and mid-size operators with 50–99 employees have an extra year to comply with the coverage requirements.
“From a regulatory perspective, these companies were in no-man’s land—they didn’t qualify for the SHOP program, and if they acted like an ALE, the costs would put them out of business,” McGowan says.
Both ALEs and small businesses must provide a benefits package that covers a minimum of 60 percent of average medical costs.