By Helen Karakoudas | ACA Education Director, Integrity Data

ACA math to check need for compliance_veterans_Integrity DataWhen counting heads to see whether a business is large enough to need to comply with the Affordable Care Act, a company has to start by looking at the service hours of every worker. But in the tally toward that all-important threshold for an Applicable Large Employer – 50 full-time employees, including equivalents – you can take some heads out of the ALE count:

  • Active and retired service members enrolled in a U.S. Department of Defense health plan
  • Any employee who as a spouse, survivor or dependent of an active or retired service member is enrolled in a U.S. Department of Defense health plan

Excluding these workers is permissible because of a law passed in July 2015 called the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015. The provision in this law that amends the definition of an ALE traces to the Hire Our Heroes Act, a bill that U.S. Rep. Rodney Davis. (R-Ill.) introduced in 2013.

Differences that this ACA head-count exclusion can make

ACA for Santa_veterans exclusion_Integrity Data ACA ComplianceAs is the case with other exclusions from the ALE head count, this exclusion can make a difference for businesses teetering on the 50 FTE threshold.

For Tax Year 2015, it can also make the difference in another threshold – as shown in the whimsical example we give in our educational ACA for Santa video Confused about the Affordable Care Act and Whether Your Business Needs to Comply? Santa Is Trying to Figure This All Out, Too.

ACA for Santa head count example_veterans exclusion_Integrity DataIn this situation, the example centers on the effects of focused hiring for a Claus Resources company called Rent a Righteous Santa, a staffing firm that screens mall Santas and their Little Helpers.

We point out that Mrs. Claus, always concerned about Hollywood’s negative portrayal of a mall Santa, had directed Rent a Righteous Santa administrators to recruit veterans and their family members. Through this recruiting effort, the company’s variable-hour workforce significantly grew by people who already were enrolled in a Veterans Administration health plan or one through TRICARE, the health care program for service members in the National Guard or Reserves.

Santa companies ALE count_Integrity Data ACA ComplianceBy excluding these employees from the head count for Rent a Righteous Santa, the ALE tally dropped from 28,788 to 34. Though that reduction, huge as it is, did not affect the ALE status of Rent a Righteous Santa on its own, it did make a difference when the head count of this company was combined with head counts from the three other companies in the Claus Resources group: Shiny Nose Brigade, N Squared Solutions, and ‘No Coal for You’ Studio.

With a combined ALE count of 99 rather than 28,853, Santa’s companies do have to comply with the Affordable Care Act for Tax Year 2015 but will be spared the risk of coverage penalties for what they did – or did not – offer employees in 2015. That’s because, in early 2014, the IRS had pushed back the start of the penalty-assessment period for employers with 50 to 99 FTEs. Rather than it being January 1, 2015 – as it is for employers with 100 and more FTE – it is January 1, 2016.

Resources to simplify understanding of ACA compliance

To learn more about ACA compliance requirements for companies in the 50-99 ALE range,

  • Tune in to our second ACA for Santa video, When Your Company Has to Comply with the Affordable Care Act, Are You Sure of What to Do and by When? Santa Is Trying to Figure This Out, Too.

To learn about other exclusions that can be taken from the ALE head count – and its effects,

  • Find a high-level view in first ACA for Santa video, Confused about the Affordable Care Act and Whether Your Business Needs to Comply? Santa Is Trying to Figure This All Out, Too
  • Dig into the weeds with these blog posts:

                     ACA math to check the need for compliance: Excluding seasonal workers from ALE count

                     ACA math to check the need for compliance: Excluding owners from ALE count

                     How can a company under 50 FTEs still be required to comply with the ACA?

For a live demonstration of quick-to-deploy, cost-effective ACA reporting software, sign up here: https://attendee.gotowebinar.com/rt/4928422701838350593