The ACA was implemented on March 23, 2010, and is intended to increase access to health care for more Americans. The ACA includes many changes that impact the commercial health insurance market, Medicare and Medicaid. ACA is also referred to as the “Health Reform Act” or “Patient Protection and Affordable Care Act” (PPACA).

The federal health care reform law imposes requirements on employers that average at least 50 full time employees or their full time equivalent starting January 1st, 2014 to offer substantially all of their full time employees’ adequate and affordable health coverage. Please note that the so-called “Employer Mandate” has been delayed to January 1, 2015.

PES is reviewing a variety of programs and options that will allow us to assist our clients in managing and fulfilling their ACA compliance obligations for their production workforce.

Frequently Asked Questions

  • The ACA was implemented on March 23, 2010, and is intended to increase access to health care for more Americans. The ACA includes many changes that impact the commercial health insurance market, Medicare and Medicaid. ACA is also referred to as the “Health Reform Act” or “Patient Protection and Affordable Care Act” (PPACA).

    The federal health care reform law imposes requirements on employers that average at least 50 full time employees or their full time equivalent starting January 1st, 2014 to offer substantially all of their full time employees’ adequate and affordable health coverage. Please note that the so-called “Employer Mandate” has been delayed to January 1, 2015.

    PES is reviewing a variety of programs and options that will allow us to assist our clients in managing and fulfilling their ACA compliance obligations for their production workforce.

  • In co-employment relationships, such as those that exist in the Entertainment Industry, according to the ACA the co-employer that directs and controls the workers day-to-day functions is the responsible employer for the ACA.

    Between the Production Company and PES, the production company will be the responsible party for providing coverage under the ACA as the controlling co-employer.

  • Beginning in 2015, the Patient Protection and Affordable Care Act requires applicable large employers (i.e., employers with 50 or more full-time equivalent employees) to offer group health insurance coverage to their full-time employees, or potentially pay a penalty. These provisions are commonly known as Employer Shared Responsibility (ESR) or ”pay-or-play” requirements.

  • The ESR provisions go into effect on January 1, 2015. Employers will use their employee information in 2014 to determine whether they have enough employees to be subject to these new provisions in 2015. The process for identifying potential fines for non-compliance will be reviewed and assessed in 2016.

  • No. The Employer Mandate applies to employers who employed an average of at least 50 full-time employees (including full-time equivalent employee or FTEs) during the preceding calendar year. If a covered employer does not offer affordable health coverage that provides a minimum level of coverage to its full-time employees, the employer may be subject to a penalty tax if at least one of its full-time employees receives a tax credit for purchasing individual coverage on a health care state exchange.

  • If the total number of full-time employees plus full time-equivalents averages at least 50 for the year; the employer is subject to the Employer Mandate.

    Full-Time Employees

    Each full-time employee counts as 1 toward the 50 full-time employee threshold. The ACA determines full-time status on a month-to-month basis, and an employee is considered full time for a particular month if he or she is employed on average at least 30 hours per week for the month, or at least 130 hours of service for the month.

    Full-Time Equivalents (FTEs)

    For all full-time equivalents (i.e., employees who are not full-time employees for a particular month), head count coverage toward the 50 full-time employee threshold is calculated by adding all of the hours worked or paid to all non-full-time employees during the month capped at 120 hours per employee, dividing total hours by 120 to obtain the monthly average and finally adding all monthly averages for the year and dividing that sum by 12 to obtain the yearly full-time equivalent average. If the yearly average equals at least 50 full-time employees, taking into account FTEs, the employer is required to provide coverage.

    Example

    If a new employer in 2014 anticipates employing 40 full-time employees each month during the year (i.e., employed for at least 30 hours per week or 130 hours each month) and 20 part-time employees working 65 hours each month during the year, the employer would add 10 full-time equivalents.

    Step 1: 20 workers x 65 hours =1300 monthly hours;

    Step 2: 1300 monthly hours ÷ 120 = 10.83 monthly FTEs;

    Step 3: repeat steps 1 and 2 to obtain FTE monthly headcounts for months 2 through 12 which also will equal 10.83 FTEs for each of those months;

    Step 4: add all FTE monthly headcounts together [10.83 FTEs x 12 = 129.96 total FTEs for months 1 through 12];

    Step 5: divide 129.96 total FTEs by 12 months which equals 10.83 FTE annual average [129.96 ÷ 12 = 10.83] which is rounded down to 10 FTE annual average) and add to the 40 full-time employees equaling 50 full-time employees and full-time equivalents for the year. The employer in this example would be subject to the Employer Mandate because it averaged at least 50 full-time employees and full-time equivalents for the year.

    The employer in this example would be subject to the Employer Mandate because it averaged at least 50 full-time employees and full-time equivalents for the year.

  • No. Properly treated loan-out personnel are not common law employees and therefore do not count under the Employer Mandate.

  • In 2014, employers should track monthly hours to determine if they will qualify as an applicable large employer and, if so, which employees will qualify for health care insurance coverage in 2015.

    PES presently has an internal tool available to calculate full-time employees. Please feel free to contact us if you would like us to provide you with an FTE count using this tool. Note that these results should be used as a guide and a resource and not as an authoritative, final analysis.

    Employers must use the actual hours of service for hourly employees.

    • Time for which an employee is paid, or entitled to payment for the performance of duties for the employer, and
    • Time that is paid, but for which the employee may not work, such as paid vacation time, sick time, disability, jury duty, military duty, and leaves of absence.

    Employers can use one of three different methods to calculate hours of service for non-hourly (salaried) employees:

    1. Counting actual hours of service from records of hours worked and hours for which payment is made or due (as noted above).
    2. Using a days-worked equivalency methodology: the employer would credit the employee with 8 hours of service for each day of service.
    3. Using a weeks-worked equivalency methodology: the employer would credit the employee with at least 40 hours of service for each week of service.

    Employers cannot use the days-worked or weeks-worked equivalency methodology if it would substantially understate an employee’s hours of service and cause a full time employee to be classified as a part-time employee.

    Employers are not required to use the same methodology for all non-hourly (salaried) employees and may apply different methods for different classifications of non-hourly employees as long as the classifications are reasonable and consistent.

    NOTE: The IRS and Dept. of Health and Human Services have not yet issued final requirements for how hours will be reported.

  • We would expect most production companies will use a 12-month Measurement Period to minimize coverage potential due to the intermittent nature of this industry’s employment.

    For example: let’s assume the production company employs 100 on-going employees from January to June to produce a motion picture and uses a 6-month measurement period from January to June and a corresponding 6-month Stability Period from July through December.

    Employees average 200 hours per month during the 6-month Measurement Period in the above example. (i.e., 200 hrs per month for the 6 months = 1200 hrs, which is greater than 6months x 130 hrs per month = 780 hrs). Production company must treat the workers as full-time employees during the following 6-month Stability Period.

    Note if a 3 month measurement period is used, the production will still need to provide a minimum 6-month stability period.

    Let’s now assume the same facts in the example above except that the production company uses a 12-month Measurement Period and corresponding 12-month Stability Period.

    Because the ongoing employee did not average at least 130 hours a month during the 12-month Measurement Period (i.e., 1200 hours is less than the required 1560 hours over the course of 12 months), the workers would not be treated as full-time employees during the following 12-month Stability Period and thus they would not be treated as full-time employees during the following 12-month Stability Period and they would not be entitled to coverage.

  • New employees are those who have not been employed for an entire Measurement Period as determined by the employer (i.e., 3 to 12 months).

    New hires qualify immediately for coverage if they are reasonably expected: at their start date to average 30 hours per week (130 hrs / per month) subject to the waiting period of up to 90 days after start of employment.

    If your production company is required to provide coverage under the Employer Mandate, hires several full-time employees for 6-months in 2014 to work on a project, and has adopted a waiting period of 90 days, you will be obligated to provide coverage to the full-time employees or pay the penalty tax for the full-time employees (excluding a safe harbor of 30 full-time employees) for the last 3 months of employment.

  • This would depend: If the employer offers coverage to qualified full-time employees, those full-time employees who are employed for 3 months or less will not become eligible for health coverage if the employer's plan was structured to impose a 90-day waiting period.

    Full time employees employed for more than 3 months would qualify for coverage, subject to the 90-day waiting period.

    Example: Employer offers health coverage to all eligible full-time employees: if a worker is employed full-time for 2 months and is laid off, the worker is not eligible to receive coverage.

    If the worker: is employed full-time for 5 months and is laid off, the worker is eligible and will need to be offered coverage, subject to the 90 day waiting period beginning the first day of his / her employment. Thus the employer will need to provide coverage for the 4th and 5th month of employment before the worker is laid off.

    Note: if the employer does not offer health coverage to the eligible employee(s) the employer will owe the penalty tax based on all full-time employees (short-term, full-time employees included) excluding an allowance for the first 30 employees.

  • A grandfathered plan is a group health plan that was in place when President Obama signed the new health care reform law, the Patient Protection and Affordable Care Act (PPACA), on March 23, 2010. Plans remain grandfathered indefinitely unless companies:

    • Significantly reduce benefits.
    • Increase costs to their employees, or
    • Reduce how much the employer pays toward benefits.

    As of November 17, 2010, employers have additional flexibility to keep grandfathered status if they:

    • Change plan funding from self-insured to fully-insured.
    • Change insurance companies if they offer the same coverage.

    Grandfathered plans are not required to comply with some of the PPACA provisions.

  • If employees are covered by a collective bargaining agreement, do employers have to follow health care reform rules, or is the plan grandfathered until the next collective bargaining agreement? Also, how does the law impact multiple unions in one benefit option?

    Collectively bargained agreements must follow reform rules. If these plans were in place when the law passed on March 23, 2010, they are a grandfathered plan. If a grandfathered plan gets rid of some benefits, increases costs or reduces what employers pay than it would lose its status and have to follow health care reform rules.

    All of the PPACA rules that apply to grandfathered plans also apply to grandfathered collectively bargained plans for all plans beginning on or after September 23, 2010. The law also allows self-insured plans with collective bargaining agreements to remain grandfathered under the same rules.

    The PPACA says insured collectively bargained plan may maintain grandfathered status until the last of their agreements in place before March 23, 2010 ends. PPACA rules then apply after the final termination date, and then all plans must comply with health care reform.

    If there are three collective bargaining agreements under one plan, then the PPACA will not apply until the last of the three agreements ratified prior to March 23, 2010 ends.