In 2015, businesses large and small will be confronted with a number of issues under the Affordable Care Act (ACA), including the employer mandate. Attorney Kristi Gauthier of Clark Hill PLC’s Phoenix office discusses the issues that will be affecting businesses this year.
2015 is a pivotal year for all employers under the Affordable Care Act. Businesses with 50 or more employees are subject to the shared responsibilities mandate, including penalties. Businesses with fewer than 50 employees are not subject to the mandate, but they will still have a number of issues that will affect them.
One subject that has gotten a lot of attention under the ACA is part-time employees. The general rule under the ACA is that employers with 50 or more full-time employees or FTE equivalents are required to offer health care coverage to all employees. One strategy some employers are exploring is increasing the number of part-time employees to avoid the 50-employee coverage level. Of course, as Gauthier points out, this strategy will work fine for some industries but be completely infeasible for others. And Gauthier also cautions employers that, while you may not have to offer coverage to part-time employees, you still have to count them when determining the size of your workforce. Employers who want to use this strategy should work with consultants to be sure they are getting the result they want.
Another strategy some businesses are exploring is changing from using employees to using independent contractors. Gauthier says her firm is getting a lot of questions about this option. Contractors don’t count as employees for purposes of the 50-employee level, and employers are not required to offer health care coverage to contractors. However, Gauthier cautions, the IRS looks very closely at independent contractors. This will be a hot issue because, Gauthier says, there has been a lot of misclassification as regards independent contractors. The IRS applies a very stringent test. Again, employers who want to pursue this strategy should work with lawyer consultants who can help them comply with the law. Just labeling someone a contractor won’t save you.
There are also some tax code changes that could affect small businesses, including IRAs and similar items. Gauthier suggests that 2015 could be a year when there are some changes to the ACA. Repeal is almost certainly not going to happen. However, there are been consistent pressure by employers to restore the definition of full-time employee to someone who works 40 or more hours per week. Gauthier says that, while the 40-hour definition may not be restored, there could be a compromise on a number such as 35 hours.
Kristi R. Gauthier is a senior attorney in Clark Hill PLC’s Phoenix, Arizona office and concentrates her practice in Employee Benefits law. Kristi is a trusted advisor and counselor to employers of all sizes in both the private and public sector on a wide variety of employee benefits compliance areas. The Legal Broadcast Network is a featured network of the Sequence Media Group.