ACA Measurement Policies

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Ferdinand Miller
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documents are the intellectual property rights of HKP.

1 ACA Measurement Policies DELIVERED BY All ideas and information contained within these documents are the intellectual property rights of HKP. These documents are not for general distribution and are meant for use by only HKP and trusted partners. Unauthorized distribution of these documents, in any form or means including electronic, mechanical, photocopying or otherwise is prohibited.

2 Contents Introduction... 1 ACA Measurement Policies Set up the initial measurement period Select eligibility rules for the policy Set up the ongoing measurement periods... 4 ACA Measurement Period... 5 ACA Lookback Change in Status Report... 6 Automatic ACA Status Updates... 7 Initial Measurement Period... 7 Ongoing (Standard) Measurement Period... 8 Transition from Initial to Standard Stability Period... 10

3 Introduction The Affordable Care Act requires that applicable large employers offer health coverage to their full-time employees. The ACA defines a full-time employee as an employee who works on average 30 or more hours per week or 130 or more hours per month. To determine employees average hours and therefore their status as either part time or full time, applicable large employers must use a measurement period. There are two measurement methods: Monthly measurement method Look-back measurement method The monthly measurement method determines employees status based on one month of work. The look-back measurement method determines employees status for a stability period based on their hours worked during a measurement period. The measurement period must be at least 3 months and may not exceed 12 months. The stability period follows the measurement period and must be at least 6 months and equal to the length of the measurement period if greater than 6 months. You can set up measurement policies that establish measurement periods and automatically update employees employment records based on hours worked during the established measurement period. HKP YOUR WORKFORCE SOLUTION 1

ACA Measurement Policies 1. Set up the initial measurement period. 1.1. Choose Client Management > ACA Setup Options > ACA Measurement Policies. 1.2. Click Add New. 1.3.

4 ACA Measurement Policies 1. Set up the initial measurement period Choose Client Management > ACA Setup Options > ACA Measurement Policies Click Add New Enter the name of the group in the Policy Group field. If you are only measuring variable-hour employees (not regular full-time, salaried employees), you might use Variable Hour Employees as the group name Under Initial Measurement Period, select when the measurement period will begin for new employees from the Start On drop-down Enter the number of days following hire on which the measurement period should begin in the Following _ days of service field Select the duration of the initial measurement period from the Duration (months) drop-down Under Initial Stability Period, select when the stability period should begin from the Start On dropdown Enter the minimum number of days for the administrative period in the Following _ days after IMP end date. Note: The initial stability period must begin no later than the first day of the fourteenth month of employment. For example, if an employee is hired in April, the initial stability period must begin by June 1 for that employee. If the duration selected in step 1.6 is 12 months, enter 28 in the Following _ days after IMP end date field. The least amount of days possible in a month is 28, so by entering 28 in the Following _ days after IMP end date field, you ensure that the stability period will begin by the first day of the fourteenth month. (isolved will automatically adjust the stability period to comply with this rule, but being consistent with the rule in the setup will help avoid confusion.) 1.9. Click Save. HKP YOUR WORKFORCE SOLUTION 2

2. Select eligibility rules for the policy. 2.1. Choose Client Management > ACA Setup Options > ACA Measurement Policies. 2.2. Click the Eligibility Rules tab. 2.3. Click Edit. 2.4.

5 2. Select eligibility rules for the policy Choose Client Management > ACA Setup Options > ACA Measurement Policies Click the Eligibility Rules tab Click Edit Select the eligibility rule from the Eligibility Rules list on the left Double-click the selected rule or click the right arrow button to add it to the Included Eligibility Rules list on the right. Note: If no eligibility rules are selected for the policy, the policy will apply to all employees. You may not want to track hours for certain groups of employees, such as salaried employees. Remember that the ACA requires employers to be consistent in their measurement method for specified groups of employees. To prevent a group of employees from having their employment record changed, you may need to have an eligibility rule created. Contact your customer service representative if you need a new eligibility rule created Click Save. HKP YOUR WORKFORCE SOLUTION 3

3. Set up the ongoing measurement periods. 3.1. Choose Client Management > ACA Setup Options > ACA Measurement Policies. 3.2. Click the Ongoing Measurement Periods tab. 3.3. Click Add New. 3.4.

6 3. Set up the ongoing measurement periods Choose Client Management > ACA Setup Options > ACA Measurement Policies Click the Ongoing Measurement Periods tab Click Add New Under Standard Measurement Period, enter the start date of the first standard (ongoing) measurement period in the Start Date field Under Standard Administrative Period, enter the start date of the first standard administrative period. The administrative period immediately follows the measurement period, so the start date of the administrative period automatically establishes the stop date for the measurement period. The stop date of the measurement period will always be the day before the start date of the administrative period. In other words, if the duration of the measurement period is 12 months, the start date of the administrative period should be 12 months after the start date of the measurement period Under Standard Stability Period, enter the start date of the first standard stability period in the Start Date field. The stability period immediately follows the administrative period, so the start date of the stability period automatically establishes the stop date for the administrative period. The stop date of the administrative period will always be the day before the start date of the stability period. Note: Administrative periods may not exceed 90 days, so the start date of the stability period must be no later than 90 days after the start date of the administrative period Under Standard Stability Period, enter the stop date for the standard stability period. Note: The stability period must be at least 6 months and must be the same number of months as the measurement period if greater than 6 months Click Save Repeat steps for the next standard measurement period cycle. The start date of the next measurement period will always be the start date of the previous cycle s administrative period. HKP YOUR WORKFORCE SOLUTION 4

ACA Measurement Period You can monitor individual employees measurement period average hours

7 ACA Measurement Period You can monitor individual employees measurement period average hours and projected stability period status in Employee Management > Employee Benefits > ACA Measurement Period. Select which measurement period you would like to view from the Measurement Period Type drop-down and click Filter. The ACA Measurement Period page will show the employee s average hours for measurement periods that include the as of date. The far right column on the page will also show their projected stability period status. HKP YOUR WORKFORCE SOLUTION 5

ACA Lookback Change in Status Report The ACA Lookback Change in Status Report shows employees who completed a measurement period during the selected pay period.

8 ACA Lookback Change in Status Report The ACA Lookback Change in Status Report shows employees who completed a measurement period during the selected pay period. The report contains the following information: Employee Number Employee Name Measurement Policy Current ACA Status Current Hours Met for ACA FT Status o This column will show Yes if the Hours met for ACA Full-time Status checkbox is selected in Employee Management > Employee Maintenance > Employment. Measurement Period Hours of Service o This is the employee s average hours per week. If the value in this column equals or exceeds 30, the Stability Period Status will be Full Time. Stability Period Status o If the hours in the Measurement Period Hours of Service Column equal or exceed 30, the status will be Full Time. o If the hours in the Measurement Period Hours of Service Column are less than 30, the status will be Part Time. Stability Period Start Date The Initial Measurement Period Results section shows employees who completed an initial measurement period during the pay period. This section of the report will show results throughout the year, depending on when employees are hired and the duration of your initial measurement period. The Ongoing Standard Measurement Period Results section show employees who completed a standard measurement period during the pay period. This section of the report will be blank except on pay periods that include the stop date for a standard measurement period. For example, if you use a 12-month measurement period, this section of the report will show results only once each year, or if you use a 6-month measurement, this section will show results twice each year. HKP YOUR WORKFORCE SOLUTION 6

Automatic ACA Status Updates Once measurement polices are established in isolved, a utility will run with each pay period to update ACA statuses for employees who have a change in status after

9 Automatic ACA Status Updates Once measurement polices are established in isolved, a utility will run with each pay period to update ACA statuses for employees who have a change in status after completing a measurement period. Initial Measurement Period Employees average hours are calculated for the duration of the initial measurement period once the pay period that includes the initial measurement period stop date is processed. Once payroll is processed, if their initial measurement period hours equal or exceed 30, a new record will be added to the Employment page. The calculation uses the ACA Hours accumulator if one is set up. The new employment record will be as follows: The Effective Date field will default to the initial stability period start date. The initial stability period start date will always begin by the first day of the fourteenth month following hire. For example, if an employee is hired in May 2016, the stability period start date will be on or before July 1, The Employment Category field will have the same employment category selected as the previous record. The Hours met for ACA FT Status checkbox will be selected. This will make the employee appear as a full-time employee on the 1095-C. HKP also sets up eligibility rules for your health plan so that employees will appear as eligible for coverage when this checkbox is selected. The Create Change in Employment Category Life Event record checkbox will be selected. If you are an isolved Open Enrollment client, this will generate a life event if you have a Change in Employment Category life event set up in isolved. This can be used to create a benefit enrollment period for the employee. All other criteria from the previous record will be the same for the new record. For example, if the Qualified Pension checkbox is selected in the previous record, it will be selected in the new record. HKP YOUR WORKFORCE SOLUTION 7

Ongoing (Standard) Measurement Period Employees average hours are calculated for the duration of the standard measurement period once the pay period that includes the standard measurement period stop

10 Ongoing (Standard) Measurement Period Employees average hours are calculated for the duration of the standard measurement period once the pay period that includes the standard measurement period stop date is processed. Once payroll is processed, a new record will be added to the Employment page if a change in ACA status occurs based on the average hours during the measurement period. The calculation uses the ACA Hours accumulator if one is set up. If employees average 30 or more hours and are not currently categorized as ACA Full Time, the following occurs: The Effective Date field will default to the standard stability period start date. The Employment Category field will have the same employment category selected as the previous record. The Hours met for ACA FT Status checkbox will be selected. This will make the employee appear as a full-time employee on the 1095-C. HKP also sets up eligibility rules for your health plan so that employees will appear as eligible for coverage when this checkbox is selected. The Create Change in Employment Category Life Event record checkbox will be selected. If you are an isolved Open Enrollment client, this will generate a life event if you have a Change in Employment Category life event set up in isolved. This can be used to create a benefit enrollment period for the employee. Note: isolved Open Enrollment is exclusive to the HCM package. All other criteria from the previous record will be the same for the new record. For example, if the Qualified Pension checkbox is selected in the previous record, it will be selected in the new record. If an employee averages 30 or more hours and is currently categorized as ACA Full Time, no action is taken. If an employee averages less than 30 hours and is not currently categorized as ACA Full Time, no action is taken. HKP YOUR WORKFORCE SOLUTION 8

If an employee averages less than 30 hours and is currently categorized as ACA Full Time, the following occurs: The Effective Date field will default to the standard stability period start date.

11 If an employee averages less than 30 hours and is currently categorized as ACA Full Time, the following occurs: The Effective Date field will default to the standard stability period start date. The Employment Category field will have the same employment category selected as the previous record. The Hours met for ACA FT Status checkbox will not be selected. The Create Change in Employment Category Life Event record checkbox will be selected. If you are an isolved Open Enrollment client, this will generate a life event if you have a Change in Employment Category life event set up in isolved. This can be used to create a benefit enrollment period for the employee. Note: isolved Open Enrollment is exclusive to the HCM package. All other criteria from the previous record will be the same for the new record. For example, if the Qualified Pension checkbox is selected in the previous record, it will be selected in the new record. HKP YOUR WORKFORCE SOLUTION 9

Transition from Initial to Standard Stability Period Employees that are full time for their initial stability period but will become part time for their first standard stability period must maintain

12 Transition from Initial to Standard Stability Period Employees that are full time for their initial stability period but will become part time for their first standard stability period must maintain their full-time status for the entire initial stability period. If an employee will change from full time to part time after their first standard measurement period, be sure the standard stability start date does not begin before the employee completes their initial stability period. Employees changing from part time to full time will generally not need to have their stability period start date overridden because the employee should be granted the full-time status at the beginning of the stability period even if the initial stability period is still in process. To identify employees transitioning from full time to part time 1. Choose Reporting > Client Reports. 2. Select the ACA Lookback Change In Status Report from the report list. 3. Select the pay period in which the standard measurement period ends. 4. Review the Ongoing Standard Measurement Period Results section and identify employees that show Yes in the Current Hours Met for ACA FT Status column and show Part Time in the Stability Period Status column, such as Kathryn in the example below. These employees will be changing from full time to part time at the beginning of the next stability period. 5. Choose Employee Management > Employee Benefits > ACA Measurement Periods. 6. Select the employee that will change from full time to part time. 7. Identify whether this is the employee s first standard stability period by checking the stability period start dates. If it is not the employee s first standard stability period, no further action is required. If it is the employee s first standard stability period, complete the steps below. In this example, Kathryn begins her first standard stability period on January 1, Select Initial from the Measurement Period type drop-down. 9. Click Filter. 10. Identify the Initial Stability Period Stop Date. If the Initial Stability Period Stop Date is before the employee s first Standard Stability Period Start Date, no further action is required. If the Initial Stability Period Stop Date is after the employee s first Standard Stability Period Start Date, the standard stability period start date must be overridden on the Employment page. To override the start date, continue the steps on page 8. HKP YOUR WORKFORCE SOLUTION 10

13 11. Choose Employee Management > Employee Maintenance > Employment. 12. Select the standard stability period record from the top of the page. (Steps continued on next page.) HKP YOUR WORKFORCE SOLUTION 11

14 13. Click Edit. 14. In the Effective Date field, enter the date immediately following the Initial Stability Period Stop Date. 15. Click Save. HKP YOUR WORKFORCE SOLUTION 12

ACA REPORTING. The ACA Play or Pay applies to Large Employers with 50 or more Full Time Employees (including Full Time Equivalents).

ACA REPORTING. The ACA Play or Pay applies to Large Employers with 50 or more Full Time Employees (including Full Time Equivalents). ACA REPORTING The rules governing the ACA reporting are complex. This document is meant as a general guide to help the user understand the process. For a full overview and official guidance, see: IRS Final