When it comes to the employer mandate, there will always be exceptions and special circumstances that will add another layer of challenge to determining full-time equivalency (FTE) – which in turn determines who receives group health coverage. Two particular circumstances are unpaid leave (e.g. FMLA, educational employment breaks) and COBRA.
Special Unpaid Leave
Employees who take unpaid leave under the Family Medical Leave Act (FMLA), Uniformed Services Employment and Reemployment Rights Act (USERRA; military leave), or due to jury duty will not have this time counted against them during the standard measurement period. When employers use the standard measurement period to determine full-time (FT) status for the subsequent stability period, they are required to do one of two things for employees on special unpaid leave:
This means that employees taking special unpaid leave cannot lose their FT status or group health coverage for the subsequent stability period.
For educational organizations, employment breaks (e.g. summer holiday) are also considered special unpaid leave and therefore are not counted towards the average hours worked during a measurement period.
Employees who either leave an organization for good or just decrease their hours below the average 30-hour/week (or 130-hour/month) mandate for FTE status can still access COBRA coverage under ACA. However, the length of COBRA coverage can vary based on when coverage was lost:
For example, if company ABC’s 12-month stability period begins on January 1, 2015 and an employee reduces hours to part-time (PT) status in March 2015, they will retain their health coverage until December 31, 2015. After than, the employer can either begin an 18-month COBRA period from March 1, 2015 (qualifying event that resulted in a loss of employer-sponsored coverage) OR on January 1, 2016 (date of loss of coverage).
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The information and materials herein are provided for general information purposes only and are not intended to constitute legal or other advice or opinions on any specific matters and are not intended to replace the advice of a qualified attorney, plan provider or other professional advisor. This information has been taken from sources believed to be reliable, but there is no guarantee as to its accuracy. In accordance with IRS Circular 230, this communication is not intended or written to be used, and cannot be used as or considered a ‘covered opinion’ or other written tax advice and should not be relied upon for any purpose other than its intended purpose