Important ACA Definitions

Below are important ACA definitions that will help you understand your ACA requirements-

Administrative Period: An optional period of time less than 90 days that employers may use to identify and enroll newly eligible full-time employees in the company health care plan.

Affordable Health Care: Affordable Premium contributions made by the employee that are less than 9.5% of household income.

ALE – Applicable Large Employer: According to the ACA, this is an employer that has at least 50 full-time and/or full-time equivalent employees.

Aggregate ALE/Controlled Group: Companies with a common owner or that are otherwise related under certain rules of section 414 of the Internal Revenue Code are generally combined and treated as a single employer for determining ALE status. Authoritative Transmitter; An employer in a Controlled Group whose 1094-C contains aggregated employer level data.

Employer Shared Responsibility: A payment assessed to the employer, under section 4980 of the Internal Revenue Code, should the employer not offer affordable health coverage that provides a minimum level of coverage to their full-time employees.

Full-Time Employee: Any employee that is reasonably expected to have a minimum of 30 hours of service per week, or 130 hours per month.

FTE – Full-Time Equivalent: A calculated value indicating how many full-time employees needed to work if they worked the same number of hours all of the employer’s part-time employees worked with 30 hrs per week being the full-time base line. (Ex. 2 part-time employees working 15 hrs each = 1 full time equivalent.)

Health Insurance Marketplace: A federally or state facilitated provider to which small employers or individuals can go to purchase health care insurance.

Initial Measurement Period: For variable hour and seasonal employees, employers are permitted to determine whether the new employee is a full-time using a period of between three and 12 month (as selected by the employer).

Look Back Period: A period of time in the past that is used to analyze your work force. In the case of the ACA, the look back period is 12 months.

Minimum Essential Coverage: The IRS defines this as coverage that provides at least 60 percent of the total allowed cost of Benefits that are expected to be incurred under the plan (also known as a “Bronze” level plan).

Part-Time Employee: Any employee that is expected to have less than 30 hours of service per week, or less than 130 hours per month.

Seasonal Employee: Any part-time employee who works additional hours for a short period of time, usually due to holiday or tourist industry seasonal schedules. Also, retail workers employed exclusively during holiday seasons. DOL 29CRF § 500.20(s) and 29CFR § 500.20(s).

Self- Insured: A self-insured group health plan (or a ‘self-funded’ plan) is one in which the employer assumes the financial responsibility for providing health care benefits to its employees. Self-insured employers pay for each out of pocket claim as they are incurred from collected funds instead of paying a fixed premium to an insurance carrier. Usually a self-insured employer will set up a special trust fund for money collected from both company and employee contributions to pay incurred claims. Self-insured plans, especially large ones, are often administered by health insurance providers.

Stability Period: A period of time (following a measurement and administrative period) during which any employee who was deemed to be “full-time” is eligible to enroll in any employer‐sponsored health care coverage. Must be at least six consecutive calendar months that follow the measurement period. Cannot be shorter than the measurement period.

Standard Measurement Period: The measurement period the employer chooses to apply to ongoing variable hour employees. An employer determines each variable hour employee’s full-time status by looking back at the standard measurement period (a defined time period of not less than three, but not more than 12 consecutive calendar months, as chosen by the employer).

Variable Hour Employee: Any employee whose work schedule varies week to week, such that the employer cannot reasonably determine whether the employee is part-time or full-time.

The IRS ACA web site has additional and detailed ACA definitions and information.