One of the requirements included in the Health Care Reform
legislation is for employers to provide their full-time employees with health
insurance. If employers do not provide health insurance to its full-time
employees, the employer will be subject to financial penalties. This part
of the Health Care Reform regulation is better known as the “Employer Mandate”
which pertains to employers with at least 50 or more full-time employees.
A full-time employee is defined as an individual working 30 or more hours per
week. In order to fall under 50 full-time employees and escape any
potential penalties or fines, employers may want to reduce their full-time employee
population. One way the employer may decrease their full-time staff is by
limiting the amount of hours worked to fall below 30 hours per week. If
an employer decides to restrict the number of hours current full-time employees
work, this may be a violation of ERISA Sec. 510 and can result in additional
fines for the employer.
ERISA Sec. 510 states employers are not allowed to penalize
employees from benefit plans that they or their dependents in which have a
right to participate. As stated above, if an employer decides to restrict
or limit the amount of hours a full-time employee works, this could be seen as
a violation of ERISA Sec. 510. In this case, the employer is trying to
limit their full-time employee population access to benefits in order to fall
below 50 full-time employees. If employers do decide to lower employee
hours, it should be well documented and communicated as to why the reduction in
hours is occurring. For newly hired employees, employers may want to
decide to create new policies that will reference an hour’s limit for recently
hired employees. It is always recommended to seek the advice of an
attorney or consultant regarding ERISA and its impact with ACA when changes may
occur within your organization.
If you have any questions or concerns regarding the
“Employer Mandate” and how it may impact your company, please feel free to
contact me at my office.
