ARCHDIOCESE OF DENVER WELFARE BENEFITS TRUST HEALTH CARE PRACTICE NOTICE #4

Transcription

1 ARCHDIOCESE OF DENVER WELFARE BENEFITS TRUST HEALTH CARE PRACTICE NOTICE #4 (issued May 14, 2018; supersedes Health Care Practice Notices 1 3) To: Parishes and Other Entities (collectively, the employers ) Which Participate in the Self-Funded Medical Plan (the Plan ) maintained by the Archdiocese of Denver Welfare Benefits Trust (the Trust ) From: The Archdiocese of Denver Management Corporation, Plan Administrator of the Trust and Plan Date: May 14, 2018 Re: Applying medical coverage requirements for employees: (1) newly hired; (2) change of status; (3) shared; (4) transferred; and (5) rehired In this Notice #4, the term employer refers to ALL parishes and other entities that participate in the Self- Funded Medical Plan maintained by the Archdiocese of Denver Welfare Benefits Trust. Offers of medical coverage are regulated by the federal Patient Protection Affordable Care Act (PPACA or simply ACA). The terms of the Plan must also be considered. The following guidance is intended to assist all employers who participate (collectively, the employers ) in the Archdiocese of Denver Welfare Benefits Trust s Self-Funded Medical Plan (the Plan ) to ensure compliance with those ACA regulations applicable to their employees service. This notice only addresses medical insurance coverage ( coverage ); it does not address any other benefits available to employees through their respective employer under the Trust. This notice applies to all employees, including teachers on a contract. See the section entitled Look Back Measurement Method (p. 9) for further information on the employer s requirement to track employee hours worked. The information that follows is divided into four sections so as to facilitate understanding of concepts that, in some places, can be technical simply due to the nature of the ACA regulations. These four sections are as follows: SUMMARY OF KEY CONCEPTS, SCENARIOS 1-5, EXAMPLES 1-5, and DEFINITIONS & ADDITIONAL EXPLANATIONS. A review of the SUMMARY OF KEY CONCEPTS will be helpful, but will not serve as a substitute for a thorough reading of this Notice #4. If after reading this Notice #4 you still have questions, please confer with your respective diocesan Office of Human Resources for further explanation. page 1 of 12 issued May 14, 2018

2 SUMMARY OF KEY CONCEPTS 1. Hire With Intent. If a position requires full-time help, hire a full-time employee; if a position requires parttime help, hire a part-time employee. HONOR EMPLOYEES and EMPLOYER PLAN AHEAD. 2. Offer Coverage To Full-Time Employees. If, on average, an employee works 30 or more hours/week, that employee must be offered coverage, REGARDLESS of whether s/he was hired to work part-time. 3. DO NOT Offer Coverage To A Part-Time Employee UNLESS That Employee... a. is a shared employee working for multiple employers with hours that total 30 or more/week; b. is part-time after having been full-time (see change-in-status/break-in-service rules); or, c. is actually working full-time hours (meaning, is working, on average, 30 or more hours/week). 4. Regularly Track Employee Hours. a. If a full-time employee is working, on average, less than 30 hours/week, OR if a part-time employee is working, on average 30 or more hours/week, these scenarios create both compliance coverage problems and general equity problems. They must be fixed. Contact your respective diocesan Office of Human Resources for assistance. b. Annually review all employee hours worked and confirm that either: offers of coverage match hours worked, OR coverage waivers are in place, as applicable. 5. Continue To Offer Coverage. If an employee is transitioned from full-time to part-time, continue to offer coverage for another three months, monitor hours carefully, then the employer has the option to drop coverage in month four, BUT ONLY IF part-time status has been maintained (this is applicable to both nonschool employees and school employees, including teachers on contract). 6. Monitor Shared Employees. If an employee works for more than one employer, s/he is considered a shared employee, and combined hours worked across all employers must be counted to determine coverage eligibility. Meaning, if a shared employee works 30 or more hours/week between all employers, coverage must be offered. 7. Start Fresh When An Employee Moves From One Employer To New Employer. When an employee leaves one employer and begins work with a different employer, s/he is to be treated as a new hire. As a new hire, the determination of coverage is the same as any new hire and the break-in-service rules do not apply. 8. Track Rehires. If an employer rehires an employee to work part-time who formerly worked full-time, apply the break-in-service rules: a. For non-school employees, the break-in-service period is 13 weeks; meaning, if the rehire occurs within 13 weeks of the employee s final day as a full time-employee, coverage must nonetheless be offered again (for a prescribed period of time) and hours tracked. b. For all school employees, the break-in-service period is 26 weeks; meaning, if the rehire is within 26 weeks of the employee s final day as a full time-employee, coverage must nonetheless be offered again (for a prescribed period of time) and hours tracked (this includes teachers that retire and are subsequently rehired to be substitute teachers). page 2 of 12 issued May 14, 2018

3 Scenario #1 Newly Hired Employee FULL TIME SCENARIOS #1 #5 A newly-hired employee s hours MUST BE monitored during the first twelve months of employment to determine eligibility for coverage. See the section entitled Look Back Measurement Method, p. 9. Employees hired as full-time (i.e., averaging 30 or more hours/week) must be offered coverage at date of hire. The employee must EITHER: (i) enroll in the Plan per the Plan s enrollment terms; or (ii) formally waive coverage. 1 An employee who waives coverage will have the option to enroll at a later date upon a qualifying life status change or, if available in any given year as authorized by the Plan Administrator, during open enrollment. Employees hired as part-time (i.e., averaging less than 30 hours/week) are not eligible to enroll in medical coverage at date of hire. 2 However, under the Plan, any employee who works for more than one employer and whose COMBINED hours qualify him/her for full-time status, must be offered medical coverage (see the sections addressing Shared Employees). ONE YEAR ANNIVERSARY OF DATE OF HIRE 3 On the one-year anniversary of an employee s date of hire, the employer must calculate the newly hired full-time and part-time employee s average hours to determine eligibility for coverage during their second year of employment (see Initial Administrative and Stability Periods in the section entitled Look Back Measurement Method, p. 9). If average hours are 30 or more/week, coverage should be maintained/offered, as applicable. See Example #1 of Newly Hired Employee. Scenario #2a Change in Status to Full-time An employer may change a part-time employee s status to full-time at any time. The Plan requires that the employer offer medical coverage to the employee as of the change in status date. The employee may then either enroll in the Plan or waive coverage. An employee who waives coverage will have the option to enroll at a later date upon a qualifying life status change or, if available in any given year as authorized by the Plan Administrator, during open enrollment. See Example #2a of Change in Status to Full-time. 1 The employer must confirm that an employee waiver of health coverage has been properly processed and is on file, either digitally or in hard copy form. 2 Under the regulations, employers are not required to offer medical coverage to part-time employees. 3 Every hire should be hired as either part-time or full-time. Sometimes, however, upon review by the employer, actual hours worked do not align with original intent or the position s actual requirements. Constant monitoring of employee hours is necessary: (i) to ensure compliance with health-care regulations; (ii) to reduce the chance of potential employer liability; (iii) to ensure employees are treated equitably by employers/across employers; and, (iv) to ensure adherence to Plan requirements. See p. 12 for further discussion. page 3 of 12 issued May 14, 2018

4 Scenario #2b Change in Status to Part-time (applicable to teachers and non-teachers) This Scenario #2b is applicable to all employees, including teachers on contract. An employer may change an employee s status to part-time at any time, but CANNOT immediately end the employee s coverage. See Example #2b of Change in Status to Part-time, and also IMPORTANT NOTE REGARDING MONITORING/DROPPING COVERAGE, p. 12. Changing a full-time employee who waived coverage to part-time can of course be done without reference to the Plan or coverage, as the employee is not enrolled in the Plan. Changing a full-time employee who enrolled in the Plan to part-time requires that the employer do the following: 1. Continue the employee s coverage during the first three (3) full months after the change in status (the testing period). 2. During the testing period, track the employee s actual hours worked, calculating average hours. If the employee averages 30 or more hours/week, the employer must continue coverage until the next time the employee s average hours are calculated (see the section entitled Look Back Measurement Method, p. 9). If the employee averages less than 30 hours/week, the employer can drop coverage on the first day of the 4 th full month after the status change. Scenario #3 Shared Employees Under both the regulations and the Plan, employers are not required to offer medical coverage to part-time employees. However, the Plan requires that employees who: (i) work for more than one employer (shared employees);and, (ii) whose combined hours qualify them for full-time status, MUST be offered medical coverage. If the employee enrolls in coverage, the cost is shared by the employers where one employer location will provide the insurance coverage (i.e., is billed for the full monthly cost of coverage) and then bills the other employer (s)for its/their share. Please contact your respective diocesan Office of Human Resources for assistance with shared employees. See Example #3 of Shared Employee. Scenario #4 Transferred Employees Employees who terminate service with one employer and commence service with a different employer are treated as a new hire. See Example #4 of Transferred Employee. DO NOT offer medical coverage to a newly hired part-time employee who was previously enrolled with a different employer. DO offer medical coverage to a newly hired full-time employee who was previously enrolled with a different employer.* * Employers to assist with smooth administration of the Plan, PLEASE contact your respective diocesan Office of Human Resources when a full-time employee transfers from one employer location to another. page 4 of 12 issued May 14, 2018

5 Scenario #5 Rehired Employees (break in service rules) Employees who are rehired by the SAME employer must follow the ACA regulation s break-in-service rules, which differ depending on whether the employee is a school or a non-school employee. The break-in-service rules require the employer to offer coverage to an employee who is rehired within a certain time. See Example #5 of Rehired Employee. Upon rehire, an employee must be offered medical coverage if the employee qualified for and was enrolled in medical coverage at the time of their termination and the break-in-service between the termination and rehire dates with the same employer is equal to or less than: 13 weeks for non-school employees (and if an employer is a parish, those employees who provide most of their services to the administration or ministry of a parish). 26 weeks for school employees (those employees who provide most of their services to the administration or ministry of a parish school or stand-alone school). Adherence to the break-in-service rules is required regardless of whether the employee is rehired as a full-time or a part-time employee. Teachers Rehired as Substitutes: When an employer is contemplating rehiring a retired full-time teacher as a substitute teacher, the employer must be prepared to offer that rehired teacher medical coverage IF the break-inservice is equal to or less than 26 weeks, even though the teacher is no longer eligible as a full-time employee. If the employer wishes to avoid the requirement to offer coverage to the substitute teacher who retired in June, the employer may choose to wait until the 26-week break-in-service period has ended before rehiring the teacher. Otherwise, an offer must be made. As for how long coverage should be offered, the Change in Status to Part-time rule that is discussed in Scenario #2b/Example #2b applies (note: the employer s rehire date is the change in status date). In certain circumstances, however, the employer may have difficulty collecting the employee s share of the premium if the employee does not work enough hours in each of the three months to cover the employee share of the coverage premium. If coverage is accepted, it may be necessary to have the employee make monthly payments to the employer. Contact your respective diocesan Office of Human Resources for further explanation as to how to collect the premium. page 5 of 12 issued May 14, 2018

6 EXAMPLES #1 #5 The following examples are provided to assist employers with Scenarios #1 #5, above EXAMPLE #1 OF NEWLY HIRED EMPLOYEE (Scenario #1) Maria Garcia was hired 6/5/2017 as a part-time employee with variable hours; she was not offered medical coverage when hired, nor did she experience a change in status to full-time. Initial measurement period: 6/5/2017 through 6/4/2018 Initial administrative period: 6/5/2018 through 7/31/2018 Initial stability period: 8/1/2018 through 7/31/ st Standard measurement period: 5/1/2018 through 4/30/ st Standard administrative period: 5/1/2019 through 6/30/ st Standard stability period: 7/1/2019 through 6/30/2020 Maria s average hours will be calculated during both the initial administrative period and the 1 st standard administrative period. If Maria s hours average 30 or more hours/week during either her initial measurement period or her 1 st standard measurement period, she must be offered medical coverage (if she does not waive coverage, her coverage should start no later than the first day of the following stability period). Specifically, if during her initial administrative period the employer calculates Maria s average hours and those hours average 30 or more hours/week, she should be offered medical coverage between 6/5/2018 and 7/31/2018; if she enrolls, coverage will begin 8/1/2018. If Maria averages less than 30 hours per week, her hours will again be averaged during her 1 st standard administrative period. If her hours then average 30 or more hours/week, she should be offered medical coverage between 5/1/2019 and 6/30/2019. If she enrolls, her coverage will begin 7/1/2019 (which falls before the end of her 1 st initial stability period). EXAMPLE #2a OF CHANGE IN STATUS TO FULL TIME (Scenario #2a) Joe Smith was hired as a part-time employee on 5/15/2005. His pastor changed his status to full-time beginning 8/5/2017. Joe is offered medical coverage on 8/5/2017. Per the Plan s current enrollment terms, the employer must ensure that Joe is either properly enrolled within 31 days, or ensure Joe has properly waived coverage. EXAMPLE#2b OF CHANGE IN STATUS TO PART-TIME (Scenario #2b) 4 John Doe was hired 1/3/2015 as a full-time employee, was offered coverage, accepted coverage, and was properly enrolled in the Plan. His employer then changed his status to part-time on 5/15/2018. Unless John opts to end his coverage, the employer must continue his medical coverage for the three (3) full months following his change in status (June, July and August 2018) while monitoring John s actual hours worked. If John averages less than 130 hours per month during these three months, the employer can drop his medical coverage on 9/1/2018, at which 4 Remember, when an employee s status changes from full-time to part-time, it is immaterial whether that employee is a nonschool employee (parish school or stand-alone school) or a school employee (including a teacher under contract); the rules are the same. page 6 of 12 issued May 14, 2018

7 time the employer begins to track John s hours using the monthly measurement period, offering coverage for months in which he works 130 or more hours, if practicable. Or, the employer can continue John s medical insurance coverage through the current initial or standard stability period 6/30/2019, and avoid the monthly measurements. The employer s regular monitoring of part-time hours is critical to ensuring an employee s rights are honored, and that the employer is in compliance with the ACA. EXAMPLE #3 OF SHARED EMPLOYEE (Scenario #3) Mary Jones was hired as a part-time employee by Parish A on 1/3/2018 where she works 20 hours per week. Mary is hired as a part-time employee by Parish B on 5/15/2018 where she works 15 hours per week. Combined, Mary works 35 hours per week; per the terms of the Plan, she is therefore eligible for an offer of coverage. The two parishes have consulted with the respective diocesan Office of Human Resources and agreed to the following: Parish A offers Mary medical coverage on 5/15/2018 and she enrolls in the Copay plan Parish A will be billed for her entire premium, which for purposes of this example, is $664 Parish A will withhold the entire employee portion from Mary s paycheck in the amount of $66 Parish A will then bill Parish B a total of 43% of the employer s share of the monthly premium (43% = 15 hours / 35 hours), or for purposes of this example, $598 x 43% = $ EXAMPLE #4 OF TRANSFERRED EMPLOYEES (Scenario #4) Javier Rodriquez was hired as a full-time employee by Parish A on 8/15/2017 where he was offered medical coverage and enrolled in the Plan. On 6/2/2018, he transferred to Parish B as a part-time employee. Javier s coverage ends on 6/30/2018 with Parish A, and Parish B is not obligated to offer him medical coverage. However, if Parish B hires Javier as a full-time employee, Parish B must offer medical coverage. EXAMPLE #5 OF REHIRED EMPLOYEE (Scenario #5) Mai Shin was a full-time teacher who retired as of 6/1/2018 (medical coverage, however, ended 6/30/2018 per the terms of her teacher contract). Despite her retirement, the SAME employer wishes her to return in the fall as a substitute teacher and she agrees to do so. The period of time between her retirement date, and the beginning of the fall academic year is less than 26 weeks. If her employer determines to hire her prior to the passage of 26 weeks, the employer must offer her medical coverage upon her rehire date. Of course, again, Mai may enroll or waive coverage. However, if her employer rehires her on or after 12/1/2018, the employer would no longer be required to offer her medical coverage. NOTE: THE EMPLOYER MUST COUNT THE DAYS FROM THE OFFICIAL DATE OF RETIREMENT, WHICH IS THE LAST DAY WORKED. Typically the last day worked is NOT the day benefits terminate. As for how long coverage should be offered, the Change in Status to Part-time rule that is discussed in Scenario #2b/Example #2b applies, and the employer s rehire date is the change in status date. If Mai is rehired effective 10/15/2018, the employer must offer her medical coverage for the three (3) full months following her rehire date (November 2018, December 2018 and January 2019) while monitoring her actual hours worked. If Mai averages less than 130 hours per month during these three (3) months, the employer can drop her medical coverage on 2/1/2019, at which time the employer begins to track her hours using the monthly measurement period, offering coverage for months in which she works 130 or more hours, if practicable. Or, the employer can continue Mai s medical insurance coverage through the current initial or standard stability period 6/30/2019, and avoid the monthly measurements. The employer s regular monitoring of part-time hours is critical to ensuring an employee s rights are honored, and that the employer is in compliance with the ACA. page 7 of 12 issued May 14, 2018

8 DEFINITIONS & ADDITIONAL EXPLANATIONS These DEFINITIONS & ADDITIONAL EXPLANATIONS are provided to assist with an employer s understanding of how the ACA regulations affect their employees eligibility for coverage. ALE ALE is an abbreviation for Applicable Large Employer, which is an employer with 50 or more employees. These employers must file IRS Form 1095-C, while small employers (with less than 50 employees) must file IRS Form 1095-B. For employers located in the Archdiocese of Denver, both forms are filed annually by Archdiocesan personnel and not by the individual employer. For employers located in the Diocese of Colorado Springs, both forms are filed annually by Diocesan personnel and not by the individual employer. Note: under relatively new employer aggregation rules in benefits contexts, Church organizations are now not required to aggregate the various affiliated employers included in select benefits plans; the Archdiocese of Denver Welfare Benefits Trust has not elected to aggregate. This means that employers are not collectively treated as one single employer, but rather, are treated as separate employers. Therefore, employers are not required to offer medical coverage to newly hired employees who were previously enrolled with a different employer when the employee is hired as part-time by the new employer (see Scenario #4 and Example #4 on Transferred Employees). Employee Full-time Employee Part-time Employee Newly Hired Employee Ongoing Employee Shared Employee Transferred Employer Employees hired as full-time that average 30 or more hours/week. Employees hired as part-time that average less than 30 hours/week. Employees who are in their first two years of employment. Employees who have completed their first year of employment. Employees who work for more than one employer. If the combined hours qualify them for full-time status, an offer of coverage must be made. Employees moving from one employer to another employer. Refers to all employers who participate in the Archdiocese of Denver Welfare Benefits Trust s Self-Funded Medical Plan (the Plan ). page 8 of 12 issued May 14, 2018

9 Look Back Measurement Method On behalf of all employers, and to ensure consistent compliance, the Plan Administrator of the Archdiocese of Denver Welfare Benefits Trust, in consultation and per agreement with the Archdiocese of Denver and the Diocese of Colorado Springs, selected the ACA s look back measurement method to determine when an ongoing employee should be offered medical coverage and when an employee s enrollment in the Plan may end due to a change in status. This method is easier to administer than the alternative monthly measurement method available under the ACA. The look back measurement method requires employers to track each employee s hours and calculate their annual average hours worked so as to determine the employee s eligibility for coverage during the following stability period. This tracking process requires that the employer establish a standard measurement period, a standard administrative period and a standard stability period to track on-going employee s average hours. Here are the following periods that employers must follow: Standard measurement period is a twelve-month period that begins May 1 st and ends April 30 th. During this time, the employer tracks the employees hours. Standard administrative period is a 61-day period that begins May 1 st and ends June 30 th (and roughly coordinates with the Plan s open enrollment period should the Plan Administrator determine to offer open enrollment in any year). During this time, the employer averages the employee s hours tracked during the standard measurement period. Employees who average 30 or more hours/week are eligible for medical coverage during the subsequent standard stability period. Employees who average less than 30 hours/week are not eligible for medical coverage during the subsequent standard stability period. See IMPORTANT NOTE REGARDING MONITORING/DROPPING COVERAGE, p. 12. Standard stability period is a twelve-month period that begins July 1 st and ends June 30 th. During this time, eligible employees who enroll in the Plan are covered even if their hours are reduced below the eligibility level. Note that newly hired employees are subject to special rules: A newly-hired employee s hours are monitored during a twelve-month initial measurement period beginning on their date of hire. The average hours are calculated during the initial administrative period. The employee is offered medical coverage beginning on the first day of their initial stability period if the average hours are 30 or more/week. Initial measurement period is a twelve-month period that begins on the employee s hire date and ends 12 months later. Full-time employees who enrolled in the Plan remain covered during this time. Part-time employees are ineligible for medical coverage (however, see the Change in Status to Full-time rule). Initial administrative period is a period of no more than 60 days that begins on the first day following the end of the twelve-month initial measurement period and ends on the last day of the following calendar month. Full-time employees who enrolled in the Plan remain covered during this time. During this time, the employer calculates the employee s average hours to determine their employee status for the subsequent twelve-month initial stability period. Initial stability period is a twelve-month period that begins on the first day of the calendar month following the end of the initial administrative period. o If the employee s average hours are 30 or more/week, the employee is eligible for coverage during the subsequent twelve-month initial stability period. The ACA regulations require that part-time employees who become eligible for coverage because their average hours calculate to 30 or page 9 of 12 issued May 14, 2018

10 more/week should be offered medical coverage that will begin on the first day of their initial stability period. However, part-time employees who fail to work on average less than 30 hours/week may be subject to disciplinary action if they knowingly do so against their employer s directive. o If the employee s average hours are less than 30, the employee is not eligible for coverage during the twelve-month initial stability period. See IMPORTANT NOTE REGARDING MONITORING/DROPPING COVERAGE, p. 12. Part-time employees and full-time employees who waived coverage and have not experienced a life status change will not be eligible for coverage. Newly hired employees transition to ongoing employees under the standard measurement, administrative and stability periods. During the employee s initial measurement period, the employer will concurrently monitor the employee s average hours during the first standard measurement period that begins after the employee is hired, calculate average hours during the first standard administrative period and offer insurance to employees who qualify on the earlier of the first day of the subsequent standard stability period or the first day of the initial stability period. LOOK BACK MEASUREMENT METHOD EXAMPLE Maria Garcia was hired on 6/5/2017 as a part-time employee with variable hours and was not offered medical coverage when hired, nor did she experience a change in status to full-time. Initial measurement period: 6/5/2017 through 6/4/2018 Initial administrative period: 6/5/2018 through 7/31/2018 Initial stability period: 8/1/2018 through 7/31/ st Standard measurement period: 5/1/2018 through 4/30/ st Standard administrative period: 5/1/2019 through 6/30/ st Standard stability period: 7/1/2019 through 6/30/2020 Maria s average hours will be calculated during both the initial administrative period and the 1 st standard administrative period. If her hours average 30 or more hours/week during either her initial measurement period or her 1 st standard measurement period, Maria must be offered medical coverage. If she accepts, coverage must commence on the first day of the following stability period. Therefore, if during her initial administrative period Maria s hours average 30 or more hours/week, she should be offered medical coverage between 6/5/2018 and 7/31/2018. If she enrolls, coverage will begin 8/1/2018. If Maria averages less than 30 hours/week, her hours will again be averaged during her 1 st standard administrative period; if her hours then average 30 or more hours/week, she should be offered medical coverage between 5/1/2019 and 6/30/2019. If she enrolls, coverage will begin 7/1/2019, which falls before the end of her 1 st initial stability period. page 10 of 12 issued May 14, 2018

11 Monthly Measurement Method When changing an employee s status from full-time to part-time, the employer can drop coverage on the first day of the 4 th full month after the effective date of the status change (see Change of Status to Part-time). This requires the employer to switch from the Look Back Measurement Method to the Monthly Measurement Method. The monthly measurement method requires the employer to track the employee s monthly hours and offer a full month of coverage for any month in which the employee works more than 130 hours (the monthly equivalent of 30 hours per week). This method may require an employer to add and remove an employee s medical coverage month by month and therefore increases the employer s administrative burden. Even so, barring planned extra hours, the employer usually does not have a practical way to determine whether this employee will exceed 130 for the month until the end of the month, making it likely that there will be no offer of coverage and the employer may face the risk of penalty if the employee enrolls in the marketplace and receives a premium tax credit. If this is a concern to the employer, the employer may choose to continue the employee s coverage through the end of the current initial or standard stability period. To be safe, for an employee who experiences a change in status from full-time to part-time, the employer should maintain the employee s part-time status every month by carefully monitoring the employee s hours. MONTHLY MEASUREMENT METHOD EXAMPLE John Doe was hired 1/3/2015 as a full-time employee and enrolled in the Plan. The employer changed John s status to part-time on 5/15/2018 BUT continues medical coverage for the three full months following 5/15/2018 (for June, July and August 2018) while monitoring John s actual hours worked. If John averages less than 130 hours per month during the three months, the employer can drop his medical coverage on 9/1/2018, at which time the employer must begin to track John s hours using the monthly measurement period, and offer coverage for months in which he works 130 or more hours, if practicable. Note that if John had waived medical coverage (i.e., he did not enroll in the Plan), the employer would not have any requirement to monitor his hours or switch him to the monthly measurement period when the change of status to part-time occurred. page 11 of 12 issued May 14, 2018

12 IMPORTANT NOTE REGARDING MONITORING / DROPPING COVERAGE Every hire should be classified as either part-time or full-time. Sometimes, however, upon later review by the employer, actual hours worked do not align with original intent or the position s actual requirements. Constant monitoring of employee hours is necessary: (i) to ensure compliance with health-care regulations; (ii) to reduce the chance of potential employer liability; (iii) to ensure employees are treated equitably by employers/across employers; and, (iv) to ensure adherence to Plan requirements. Full-time employees who are enrolled in coverage MUST average at least 30 hours per week to remain eligible for coverage. Employer must monitor actual hours worked and periodically reevaluate employee status (please refer to the Look Back Measurement Method in DEFINITIONS & ADDITIONAL EXPLANATIONS). If, at the end of each measurement period, it is determined that an employee s average hours have dropped below 30 per week, the employee s status should be changed from full-time to part-time and the employer should drop coverage (and any other benefits only available to a full-time employee) beginning on the first day of the employee s subsequent stability period. If the employer chooses to continue coverage for an employee who no longer qualifies, (i) the employer is required to discuss with the employee the full-time requirement that hours must average at least 30 hours per week, and (ii) the employer is required to continue to track and monitor the employee s hours to ensure the employee will begin qualifying for coverage in the future. If the employee fails to work the required full-time hours, despite their employer s directive to do so, the employee may be subject to disciplinary action in addition to losing medical coverage. page 12 of 12 issued May 14, 2018