Under health care reform, companies with 50 or more full-time eligible workers must either provide basic coverage by Jan. 1, 2014 or face fines of $2,000 per employee under new Code Section 4980H.
For purposes of this new section, a fulltime employee is any employee who, on average, is employed at least 30 hours per week during a month. The difficulty lies in calculating the number of full-time eligible workers because the term really applies to the sum of full-time employees as defined by Code Section 4980H and an additional number equal to the total hours of service during a month worked by employees who are not full-time, divided by 120.
Calculating Full-Time Status, Safe Harbor & More
To help ease the administrative burden, the IRS has created an alternative method of determining full-time status – the 4980H Safe Harbor. It allows an employer to establish a “measurement period” of between 3 and 12 months during which an employee’s hours of service are measured. The Safe Harbor is applied differently to new and ongoing (those employed for one standard measuring period) employees and new employees must be classified in either of two ways, according to the intent that exists on the date of hire.
When you consider that PPACA legislation contained more than 2,700 pages, you can understand why we’ve only scratched the surface. For more information or compliance assistance, contact us at any time.
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