As the new Affordable Care Act (ACA) tax filing and reporting requirements near, more companies are wondering what they need to do to comply with ACA standards.
While the guidelines for health care coverage are explained for regular employees, businesses also must consider this benefit for union signatory contractors. So what are the obligations for these organizations in terms of providing health insurance for workers? Let’s take a closer look.
Determination of Business Size
The first step for companies is to figure out what’s required based on the organization’s size. This means determining if a company is a small or large employer. The former is a business with fewer than 50 employees, while the latter employs 50 or more full-time-equivalent workers.
Although small employers aren’t required to provide health care for their employees, these companies must still report their employees and status to the IRS. Large employers, on the other hand, are obligated to provide at least minimum essential coverage to 95 percent of their workers or face hefty penalties for noncompliance.
Union workers are included in an organization’s employee count when determining an employer’s size and ACA requirements. Therefore, if a company is a large employer, it’s required to provide health insurance for unionized employees as well as all other workers.
Exception: Union Group Health Plans
Union members have access to Taft-Hartley funds, which offer health benefits. These plans are collectively bargained by participating employers and the worker’s union and are managed by a board of trustees made up of an equal number of company representatives and union leadership.
Taft-Hartley funds are an ACA exception for large employers. A company isn’t required to offer health insurance to union workers if the business already contributes to a union group health plan on the person’s behalf and that coverage is affordable and provides minimum value. However, if the health benefit doesn’t meet ACA standards for affordability and minimum coverage, the employer could be found noncompliant and face pay-or-play penalties.
The Waiting Period Effect
Some union bargaining agreements include a stipulation for an hour bank, where members may accumulate hours working for multiple employers. If these employees’ hours add up to a specified number in a particular quarter, they’ll be eligible for health coverage as of the first day of the next quarter. Although Final Waiting Period regulations limit it to 90 calendar days, agreements with an hour bank will still be seen as ACA compliant.
It’s easy for employers to know whether union workers are receiving ACA compliant coverage if the company is the one setting up the standards and ensuring it meets government requirements. It’s more difficult if an employee is being insured by a multiemployer plan; even though the organization is contributing to the program, it’s not providing the actual coverage. Most of the time, these contributions are required under collective bargaining agreements.
Since this is a common occurrence, the U.S. Treasury Department and IRS have addressed it: As long as the multiemployer plan offers insurance that provides minimum value, is affordable and offered to the children of those who are otherwise eligible, the employer won’t be penalized.
Companies must be cognizant of ACA regulations and how they affect employee health coverage. Businesses that employ union workers must complete their research to ensure they’re receiving the appropriate amount of insurance and that it complies with government standards.
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