Frequently Asked Questions About ACA

Click on any FAQ below to read the answers to our most common healthcare compliance questions. Or click on the section name below to jump to that section.

General

  1. Which employees may qualify for healthcare under the Affordable Care Act (ACA)?

    RTI cannot make any specific recommendations about which employees qualify for healthcare under the ACA. We do suggest you review the information and guidelines provided on the IRS and the National Restaurant Association websites, and consult with your insurance broker, CPA, and legal advisors.

    While other circumstances may apply to your situation, the ACA does state that any employee who averages over 30 hours per week over a set time frame qualifies for healthcare.

  2. Can RTI help me in determining who “might” qualify for healthcare under the ACA?

    Yes. RTI has created reporting tools that shows you all the employees who are averaging 30 hours or more over a time frame that you specify (3 to 12 months).

    • The Healthcare Alert Report shows you which employees are trending more than 30 hours each pay period.
    • The Manager Action Report shows you the employees who have reached the end of their measurement period and are eligible for coverage.
  3. Why should I care if an employee averages 30 hours or more per week?

    Per the ACA, one of the guidelines in determining which employees qualify for healthcare is that they have averaged 30 or more hours over a set time frame. This timeframe is called the measurement period (also known as the “look-back” period).

  4. I have heard the terms: measurement period, stability period, and administrative period. What do these mean?

    Per the ACA:

    • The measurement period is the time period used to determine whether a variable hour employee is a full-time employee. Each employer can choose a length of time not less than 3 months and not more than 12 consecutive months.
    • The stability period is the period of time the employee must be treated as a full-time employee and have health insurance coverage. This follows the measurement period and is between 6 and 12 months but must be at least as long as the measurement period. This will typically correspond to your insurance plan year.
    • The administrative period usually occurs between the measurement and the stability period and provides the employer the time to enroll the eligible employees in the offered healthcare plan. The administrative period can be between 30 and 90 days.

    RTI recommends working with your CPA, insurance broker, and your legal advisors to determine the time frames for these periods that work best for your operation.

  5. I’m trying to create a custom healthcare report, but it is not spanning across payroll years. Why not?

    The custom reports in RTI Payroll are year-specific. They can only be run for the year you are working in. The Average Hours Report does span across payroll years. However, as this report does not take into consideration all of the ACA regulations, it is best used as an estimate and should not be the final determination of whether an employee qualified or not.

  6. Does RTI Payroll handle Breaks in Service?

    Yes. If a break in service is greater than 13 weeks, the original hours do not count towards the average. At that point, the employee would then become a new hire.

  7. Do I need to make changes to my Insurance Deductions to account for the safe harbors?

    You can continue to use your existing Insurance Deductions until the end of your insurance coverage year. You will want to set up new Insurance Deductions for your 2016 coverage year to ensure you’re meeting the affordability clause of the ACA. We’ve also added a Healthcare Addition to help track the employer portion of the insurance premium for W-2 reporting purposes.

Average Hours Report

  1. What dates should I use to run the Average Hours Report?

    The ACA measurement period can be between 3 and 12 months—so you can pick any date range within this time frame.

    NOTE: The Average Hours Report will ONLY calculate your employees’ average hours if you use a pay period begin date for the begin date of the report and a pay period end date for the end date of the report.

  2. What are the different sections on the Average Hours Report?

    The Average Hours Report is updated to include all employees. The employees are broken down into the following categories:

    • Employees who average 30 hours/week or more
    • Employees who average less than 30 hours/week
    • New Hires who average 30 hours/week or more
    • New hires who average less than 30 hours/week
    • Salary/Flex employees
  3. How is the average hours figure calculated when the employee works in different stores? What about different tax reporting groups?

    The ACA requires you to look at the average hours across the company, not just for the individual stores. As stated by the National Restaurant Association, for the purposes of health care reform, a single employer is defined by the “common control” clause in the tax code. To help you best manage employees who work across stores, the hours for these employees will be added across stores, and these employees will show on the reports and the CSV files for each store they worked in.

    Some of you may have multiple Healthcare Groups. In this instance, an employee’s hours at multiple stores would not be combined if those stores are in different Healthcare Groups.

  4. Why do I need to choose which departments and pay types I want to run the report for?

    According to the ACA guidelines, different measurement, administrative, and stability periods can be set for employees in different entities, different pay types, and different states. Allowing you the ability to run the reports for specific departments and pay types allows you to take advantage of differing measurement periods—if you determine that is the best choice for your organization.

  5. How are new hires handled on the Average Hours report?

    New hires are subject to an initial measurement period that may be different than the measurement period used for on-going employees. Currently, we calculate the average hours of a new hire from their date of hire and include any new hires who have averaged 30 or more hours in the report’s time frame.

    The Manager Action Report will alert you when new hires reach the end of their new hire measurement period and will indicate whether or not they are eligible for coverage.

  6. Can I send the results of the Average Hours Report to others?

    Yes, you can either print the report to a PDF file and email it, or you can send the list of employees on the report in a CSV file that is automatically created when you view the report. By default we will save these files to C:\ACA, but you can change this path if needed.

  7. How does the Average Hours Report calculate for a semi-monthly payroll?

    The report takes the total hours in the time frame provided and divides it by the number of weeks in the time frame to get the average hours. Typical semi-monthly pay periods are 15 days, or 2 weeks and 1 day. One day is 1/7th of a week or 0.14 week, so a 15-day pay period would be 2.14 weeks.

    For example, if the report is run for a 90-day period of 10/1/12 to 12/31/12, that would be a total of 13 weeks and 1 day, or 13.14 weeks.

  8. Is a monthly report available?

    A monthly report is not currently available.

  9. Where is the file located after running my report?

    We use a default File Name and File Path for the report. The File Path—C:\ACA—puts the file in an ACA folder on the local drive of the workstation that ran the report. You can change the File Path when running the report to place the file in a different location.

  10. What is the difference between the Manager Action Report and the Average Hours Report?

    The Manager Action Report provides a list of the employees who have qualified for insurance during the last pay period. The Average Hours Report shows you the average hours an employee has worked over the time frame entered when running the report.

Weekly Hours Report

  1. What is the Weekly Hours Threshold on the Weekly Hours Report?

    It is used to limit the employees who show up on the Weekly Hours Report. Any employee who meets or exceeds the Weekly Hours Threshold will be listed on the report.

  2. Why would I want to change the Weekly Hours Threshold?

    Some operators have asked to be able to lower this threshold below the ACA threshold of 30 hours.

  3. An employee isn’t showing on the Weekly Hours Report. Why not?

    The Weekly Hours report is designed to show you the employees who worked over the Weekly Hours Threshold for each week in the pay period. If their hours do not meet or exceed this threshold, they will not show up.

  4. How are new hires handled on these reports?

    A new hire is treated as any other employee. If they work 30 or more hours in any week during the pay period, they will be included on the report.

  5. All my hours are being reported under Week 1 for my bi-weekly pay run. Can I change this?

    Yes, if you can get weekly hours from your POS, you can transfer those hours separately into Payroll. You will need to check the Use Week 2 on Data Entry option in Parameters on the Payroll Maintenance menu.

Manager Action Report

  1. I was not prompted to print a Manager Action Report this pay period. Why not?

    The Manager Action Report prints when you have employees who moved from a measurement period to an administrative period within that pay run. Each new hire has their own measurement period for the first year and as they move into their first administrative period you will receive a Manager Action Report for those employees. Some pay periods may not have any employees who qualify.

  2. Which report shows me all of the qualified employees for the ongoing measurement period that just ended?

    The Manager Action Report includes all the employees who qualified as of the recently completed pay run. When you completed the pay run that included the last day of your measurement period, you would have been prompted to print the Manager Action Report if there are employees who qualified. The report is still available for prior pay periods if needed.

  3. Why am I prompted to print the Manager Action Report after each pay period?

    The Manager Action Report provides the list of qualified employees from each pay period. As new hires reach the end of their unique measurement period, this report lets you know if they need to be notified that they have qualified for insurance coverage.

    This report also notifies you when an employee’s coverage may be ending as well as a list of employees you are waiting on a response from.

  4. What is the difference between the Manager Action Report and the Healthcare Alert Report?

    The Manager Action Report provides a list of the employees who have qualified for insurance during the last pay period. The Healthcare Alert Report shows you the employees who are averaging over 30 hours from the start of the measurement period to the end of the recently completed pay period.

  5. What is the difference between the Manager Action Report and the Average Hours Report?

    The Manager Action Report provides a list of the employees who have qualified for insurance during the last pay period. The Average Hours Report shows you the average hours an employee has worked over the time frame entered when running the report.

  6. The Manager Action Report also lists employees who no longer qualify. Since employees who accepted coverage must remain covered for the entire stability period, who does this refer to?

    Employees listed in the “Employees who no longer qualify” section of the Manager Action Report will fall into two main categories:

    1. Terminated employees.
    2. Employees whose coverage is set to end at the end of their stability period because they did not qualify during a subsequent measurement period.

Healthcare Alert Report

  1. What is the difference between the Healthcare Alert Report and the Pay Period Hours Report?

    The Healthcare Alert Report shows you any employee who is averaging over 30 hours per week or 130 hours per month from the start of the measurement period to the end of the recently completed pay period. The Pay Period Hours Report provides you with a list of employees who worked more than 30 hours per week or 130 hours per month in the pay period that was just completed.

  2. What is the difference between the Manager Action Report and the Healthcare Alert Report?

    The Manager Action Report provides a list of employees who have qualified for insurance during the last pay period. The Healthcare Alert Report shows you any employee who is averaging over 30 hours per week or 130 hours per month from the start of the measurement period to the end of the recently completed pay period.

  3. Why is the begin date on the Healthcare Alert Report not the same for everyone?

    The begin date on the Healthcare Alert Report is the start date of the measurement period for that specific employee. For most employees, this will be the start of your standard measurement period. For new hires who have an initial measurement period that starts on their hire date, this date will vary for each employee. Once an employee has completed their initial measurement period, they will be measured based on your company’s standard measurement period.

  4. If the begin date is different based on the employee’s measurement period, why is the end date on the Healthcare Alert Report the same for everyone?

    The end date on this report is the Pay Period End Date of the last updated pay run, which is typically the same for all employees. If you run different pay cycles for different stores, then this end date may be different for different employees.

Qualifying Employees

  1. How many weeks does an employee have to work more than 30 hours before they qualify for healthcare coverage?

    The answer to this question will vary based on the length of your measurement period. Because the qualification for healthcare is based on the average hours worked over the measurement period, there is no predetermined number of weeks an employee can work 30 hours.

  2. Will RTI Human Resources (HR) maintain the hours correctly for employees who are rehired?

    Yes. RTI HR tracks rehires and determines what their initial measurement period is based on their length of service as well as the length of any break(s) in service.

  3. During payroll we have always entered all hours into the Week 1 box. How will this affect the Average Hours Report?

    Entering biweekly pay run hours into one week will not affect the Average Hours Report, as it calculates the average based on the time frame selected when the report is run. To get a more accurate reflection of employees working more than 30 hours per week on the Weekly Hours report, you may want to break out your payroll weeks separately. Information on making this change in your payroll process can be found here.

  4. How does the tracking of weekly hours work if I have a semimonthly pay period? We poll our stores for pay period total hours and not weekly hours. (Our pay periods run from the 1st–15th of the month and then from the 16th to the last day of the month.) How are the weekly hours then calculated for healthcare compliance?

    For clients with a semimonthly pay run cycle, RTI recommends using the 130-hour monthly equivalent of 30 hours per week. The Weekly Hours Report will show either a weekly average or monthly average depending on your pay cycle.

  5. How does RTI calculate the average for weekly or biweekly pay runs? What about for semimonthly or monthly pay runs?

    For weekly and biweekly pay runs, RTI will calculate a weekly average by making the following calculation:

    Number of day on report / 7 = number of weeks
    Total hours / number of weeks = average hours

    For semimonthly and monthly pay runs, RTI will use the 130 hour/month calculation as follows:

    Total hours / number of months = monthly hours

    For the monthly 130 hours calculation, if a partial month is included, then the percent of that month included will be used for the calculation.

  6. Can you provide more information on the Average Hours Detail Report?

    The Average Hours Detail Report is designed to assist you in providing detailed information to employees who are asking why they did or did not become eligible for healthcare coverage.

  7. The Average Hours Detail Report references Leave Days. What are these used for?

    The law requires that hours an employee is on leave due to vacation, holiday, illness, disability, layoff, jury duty, military duty, or leave of absence are included in their average hours calculation. You should be entering these hours in the employee’s record so they are included in their average hours calculation.

  8. The results on the Average Hours Report in Payroll are different than the reports from my POS system. Why is there a difference?

    The Average Hours Report includes all hours entered for your employees. This includes vacation and sick hours, and this information may not be available in your POS system. In addition, the Average Hours Report takes into consideration any employee breaks in service.

  9. Is the break in service based on employees being terminated in Payroll or if there is no payroll data for more than 13 weeks?

    The 13 week break in service calculation is based on whether a check has been issued for an employee in more than 13 weeks. The employee does not have to be terminated for Payroll to calculate a break in service.

  10. When do new hires have to be offered insurance?

    This depends on if the employee is hired as a full-time employee or not. If they are hired as a full-time employee, you have 90 days from their date of hire to offer them insurance and get them enrolled. If they are a variable hour employee, or you can’t reasonably determine if they will be a full-time employee from their hire date, you can use a look back period, or measurement period of up to 12 months to determine if they averaged over 30 hours per week and qualified for insurance. If they qualified, they must be enrolled within 13 months of their hire date.

    For example, a full-time employee hired on Sept. 1, 2014 would need to be offered and enrolled in insurance by Dec. 1, 2014.

    A variable hour employee hired on Sept. 1, 2014 would have a one year measurement period and would be evaluated on Sept. 1, 2015 and, if qualified, would need to be offered and enrolled in insurance by Oct. 1, 2015.

    Both these examples presume the employee accepts the insurance.

  11. If an employee qualifies for insurance during the first measurement period and then their hours drop after they have accepted coverage, can they be dropped from the insurance?

    For employees who qualify during their measurement period and accept coverage, they must remain on the insurance plan for the entire stability period, even if they no longer average 30 hours per week. Those hours will be reviewed at the end of the next measurement period to determine if they qualify for insurance in the next stability period.

  12. If an employee qualified for insurance at the end of the measurement period but declined coverage, can they be added in the middle of the stability period?

    During the stability period, changes can only be made to an employee’s insurance coverage due to a change in circumstances. Changes in circumstances are defined as:

    • Birth
    • Death
    • Marriage
    • Divorce
    • Adoption
    • Change in spouses’ employment status
  13. What types of leave are considered approved leave for ACA purposes?

    The Affordable Care Act considers the following leave types as approved leave:

    • Vacation
    • Holiday
    • Illness
    • Incapacity (including disability)
    • Layoff
    • Jury Duty
    • Military Duty
    • Leave of Absence

Healthcare Coverage Options

  1. How do I set up the different healthcare coverage options?

    The healthcare coverage options can be set up for each coverage type you offer. If you have different employee groups, separate sets of coverage options can be set up for each group.

  2. Will the benefit Healthcare tab link directly to the employee’s cost by activating or inactivating the healthcare cost? Will there be different categories for different positions available?

    Human Resources gives you the ability to set up different healthcare coverage categories for different positions.

  3. How many different coverage options should I use?

    You should set up a coverage option for each insurance option you are offering to your employees. For instance, if you are offering Bronze, Silver, and Gold plans for employees and employees plus family, you would set up 6 coverage options:

    • Bronze – Employee Only
    • Bronze – Employee + Family
    • Silver – Employee Only
    • Silver – Employee + Family
    • Gold – Employee Only
    • Gold – Employee + Family
  4. I’ve changed the options for this year. What do I need to do?

    You will need to change your coverage types in RTI Payroll to reflect the options currently being offered.

Measurement Periods

  1. What is the difference between an initial and standard measurement period?

    The standard measurement period is used for all employees who were employed prior to the start of that measurement period. Any employees hired after the start of your standard measurement period will have an initial measurement period for their first year. Afterwards, they will transition into your standard measurement period.

  2. Does RTI Payroll handle tracking for both initial and standard measurement periods?

    Yes. When new hires are entered, their initial measurement period is calculated based on their hire date. Once that initial measurement period is complete, they will be transitioned to the standard measurement period.

  3. How does RTI handle overlaps between the initial and standard measurement periods?

    Any new hires, which are defined as anyone with a start date after the beginning of your measurement period start date, will have a unique measurement period that begins on their hire date. After their first year they will fall into the standard measurement period.

  4. Can I change my measurement period?

    No. The provisions in the ACA do not allow for the measurement period to be changed.

  5. Can I have two measurement periods?

    Per ACA regulations, you can set up different measurement periods for different categories of employees such as hourly and salary.

  6. How are leave of absences handled if they occurred during our measurement period?

    These leave days will be subtracted from the measurement period for that employee so it does not count against them. Approved leave includes illness, incapacity (including disability), jury duty, and military duty.

  7. We defined our measurement period previously. Where can I find these settings?

    In RTI Payroll, go to Maintenance – Healthcare – Healthcare Parameters or Healthcare Groups to review your settings.

  8. My measurement period start date is in the middle of my pay period. How does that affect the average hour calculation?

    When calculating the average hours, Payroll will use the pay period start date closest to the measurement period start date and the pay period end date closest to the measurement period end date.

Compliance

  1. We have 3 different Tax Reporting Groups with different ownership for each. Will RTI Payroll/HR accommodate this?

    Yes. However, you will want to discuss this with both your Healthcare Consultant and your CPA. The healthcare options may not follow your Tax Reporting Groups (TRG). The IRS has modeled this after Control Groups, which take common ownership into consideration. While you may have multiple TRGs for payroll purposes, you could have only a single Control Group for healthcare reporting purposes. Either way RTI Payroll/HR can handle this.

Deductions and Additions

  1. Will setting up a non-cash addition to track the employer portion of the employee’s healthcare coverage impact the employee and employer payroll taxes?

    RTI Payroll will use the Healthcare Addition type for tracking purposes only, so the total amount of healthcare coverage is printed on the employee’s W-2 at the end of the year. This addition will have no impact on the employee’s wage calculations.

  2. If we decide to charge the employee portion of the healthcare as a percentage of pay versus a set dollar amount, can Payroll accommodate this type of variable deduction?

    Yes. Payroll will allow you to set up either a percentage deduction or a set dollar amount. Either type of deduction can be set to cap at the 9.5% maximum to meet the affordability requirements.

  3. We may decide to deduct 9.5% of the employee pay for their personal coverage, and then 100% of the cost for any dependent coverage. Will Payroll allow both a percent and fixed dollar deduction on the same employee?

    Yes. Payroll will allow multiple deductions for the same employee. In fact, to help ensure you meet the affordability safe harbor we recommend using two deductions: one for employee-only coverage and another for dependent coverage.

  4. Can I set up a deduction to take an amount and a percent?

    Deductions can be set up to take a set amount but also to not go over a percentage. So you can set up a deduction to take $50 but not more than 9.5%. It will take the $50 each pay period, unless it would be more than 9.5% of their wages from that pay period.

  5. Can I use a different percentage than 9.5 to ensure the deduction amount meets the affordability requirement of the law?

    Yes. You can set up a deduction to withhold a specific percentage. However, these options deduct a percent of gross or a percent of net and cannot specify a percent of federal wages.

  6. How is the additional premium paid by employees used?

    The additional premium paid by employees is used to track insurance premium amounts paid outside of a pay run to ensure the correct amount is included on the employees W-2s at the end of the year. This could be for tipped employees who did not have enough wages to withhold the premium or employees on leave who need to pay for their coverage while they are out.

  7. When will the premium or deduction amounts fill in on the employee record?

    It is populated each pay run with the amounts deducted from the employee’s wages when the Insurance Deduction is classified as a Healthcare Deduction. The same is true for the employer’s portion using an addition classified as a Healthcare Addition.

  8. Which portion of the insurance premiums have to be capped at 9.5%?

    Only the insurance premium for the single or employee only coverage for the lowest tier plan has the 9.5% deduction limit. For this reason, RTI recommends setting up one deduction for employee only Bronze coverage that will be assigned to everyone who elects coverage and one deduction for any additional coverage the employee opts to enroll in.

  9. Is there a priority for the insurance premium over other deductions such as child support and tax garnishments?

    The order or priority of deductions has not changed with the Affordable Care Act regulations. The Federal guidelines stipulates that deductions should be taken in the following order:

    • Social Security and Medicare taxes
    • 401(k)
    • Section 125 Benefits
    • Federal taxes
    • State taxes
    • Garnishments (including child support and tax levies)
    • Other Misc. benefits
  10. Is there a maximum amount that can be deducted? For example, if an employee earns $50,000, can I deduct 9.5 percent?

    The employee cannot be charged more than the full premium amount.

  11. If we use the 9.5% safe harbor, does this automatically adjust for Cafeteria Plan, non-taxable deductions?

    Yes. Payroll automatically adjusts for non-taxable deductions.

  12. I heard the affordability percentage (9.5%) under the ACA Employer Mandate has increased. How can I change this in Payroll?

    The affordability percentage under the ACA Employer Mandate does change each year based on inflation rates. This information was released last year after the Offers of Coverage were made so our healthcare advisors recommend continuing to use 9.5% for 2016.

    For 2017, the affordability percentage is 9.69%. RTI will be releasing an update to increase this percentage and will do so each year a new percentage is announced.

Form 1095-C

  1. What information in Payroll is used to populate the 1095-C?

    Please see our 1095-C Blueprint for an overview of how all the Payroll fields work together to populate the 1095-C.

  2. Is there any set up I need to do before printing 1095-Cs?

    Yes. You need to set up your Healthcare Plan Calendar Information and Employee Self-Only Coverage Premium Caps for each department. See Updating Departments Before Printing 1095-Cs for detailed instructions.

  3. Do all employees receive a 1095-C?

    No, only employees who qualified for healthcare coverage will receive a 1095-C.

  4. Does an employee who declined coverage receive a 1095-C?

    Yes, a 1095-C will be provided to all employees who qualified for healthcare coverage, even if they declined coverage.

  5. I have an employee who works in multiple Tax Reporting Groups (TRGs). Will they receive a 1095-C for each TRG they work in?

    It’s possible these employees will receive multiple 1095-Cs. This will depend on which TRG the employee had the most hours in each month. That TRG is determined to be the employees primary employer for that month.

  6. Is the information reporting on the 1095-C for medical coverage only? What about additional coverage such as vision or dental?

    Yes, the 1095-C is for reporting medical coverage only. Additional coverage options, such as vision, dental, or disability are not required to be reported on the 1095-C.

  7. Do the new department fields need to be completed for all departments?

    Yes, all departments must have the new department fields completed before printing 1095-Cs.

  8. Do I need to set up the department information before starting a new payroll year?

    Yes. You’ll need to update the Healthcare Plan Calendar Information before starting your new payroll year.

  9. When are 1095-Cs due to employees?

    The 1095-C filing deadlines are:

    Jan. 31 – Due to the employees

    Feb. 28 – Due to IRS for paper filing

    Mar. 31 – Due to IRS for electronic filing

  10. Are 1095-Cs sent in the same envelopes as W-2s?

    No, 1095-Cs are not the same format as W-2s and do not fit in the same envelope.

Form 1095-C, Line 14 – Offer of Coverage

  1. How do I know which safe harbor I used?

    If you’re unsure which safe harbor was selected, please confirm with your healthcare consultant.

  2. What do the codes on lines 14 and 16 indicate?

    Line 14 codes designate what offer of coverage was made to the employees or if you were eligible for transition relief. Line 16 codes designate which safe harbor was used to ensure the coverage is affordable. A full list of the codes can be found at 1095-C Codes and further explanation can be found on the IRS website.

  3. If less than 70% of our employees were eligible for insurance and we did not offer insurance coverage, what option do we select for the ACA Coverage Type?

    If you had more than 100 full-time and full-time equivalent employees but fewer than 70% of those full-time employees were eligible for insurance and you did not offer coverage for 2015, you should select the No offer of MEC coverage for the ACA Coverage Type field in Departments. If you’re uncertain this is the correct selection, please confirm with your healthcare consultant.

  4. Are the 1095-C line 14 codes for the offer of coverage made or the coverage accepted?

    The codes for 1095-C line 14 are for the offer of coverage made, not the coverage accepted.

Form 1095-C, Line 15 – Employee Required Contribution

  1. What amount will go on line 15 on the 1095-C?

    1095-C line 15 is the calculated amount of the employee’s premium based on the safe harbor used. This amount may not match the amount the employee actually paid.

  2. What is the calculation for the Rate of Pay safe harbor?

    The Rate of Pay safe harbor is calculated by taking the employee’s rate of pay x 30 hours per week x 52 weeks to estimate the employee’s annual wages. The resulting total is then multiplied by 9.5% to determine the annual premium for the employee.

  3. Our group plan premium amounts are not broken out by age group. How do I enter the Employee Self-Only Coverage Premium Caps in Departments?

    If your plan amounts are not broken out by age group, then enter the same premium cap for each age group.

  4. If we’re using the W-2 safe harbor, what should the premium cap be?

    The premium cap is the maximum amount the employee can be charged for insurance. This will typically be the premium amount from the insurance company, minus any set amount that the employer is contributing.

  5. Is the Departments field for Employee Self-Only Coverage Premium Caps the monthly premium?

    Yes, the premium caps entered in Departments is the maximum amount an employee can pay per month.

  6. If we use the Federal Poverty Level safe harbor, what amount is entered in line 15?

    Line 15 should be left blank if the Federal Poverty Level safe harbor is used.

  7. Can you provide some examples for the Employee Self-Only Coverage Premium Caps?

    Let’s use a monthly insurance premium amount of $550. As an employer, you are paying 25% of this premium. This leaves the employee to pay 75% or $412.50. This is the premium cap amount.

    Using the Rate of Pay safe harbor

    Let’s look at an employee who makes $10 per hour. The calculation for the safe harbor would be:

    $10 x 30 hours per week = $300

    $300 x 52 weeks per year = $15,600 annual wages

    $15,600 x 9.5% = $1,482

    $1,482 is the maximum this employee can contribute annually based on the safe harbor or $123.50 per month.

    Since $123.50 per month is less than the premium cap above ($412.50) line 15 will have $123.50 for this employee.

    If you have an employee who makes $35 per hour, the calculation would be:

    $35 x 30 hours per week = $1,050

    $1,050 x 52 weeks per year = $54,600 annual wages

    $54,600 x 9.5% = $5,187

    $5,187 is the maximum this employee can contribute annually based on the safe harbor or $432.25 per month.

    Since $432.25 per month is greater than the premium cap above ($412.50) line 15 will have $412.50 for this employee.

    Using the W-2 safe harbor

    If you have an employee who has Federal box 1 wages of $23,500:

    This employee can contribute 9.5% or $2,232.50 annually. This is $186.04 monthly.

    Since the $186.04 per month is less than the premium cap above ($412.50) line 15 will have $186.04 for this employee.

    If you have another employee who has Federal box 1 wages of $60,000:

    This employee can contribute 9.5% or $5,700 annually. This is $475 monthly.

    Since $475 per month is greater than the premium cap above ($412.50) line 15 will have $412.50 for this employee.

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