Affordable Care Act

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While there have been changes to the ACA, many provisions continue to be in effect and failure to comply with the law and regulations may result in penalties. The information below is current as of January 2023. Below are provisions that could affect your company.

  • Applicable Large Employer (ALE) Designation— Companies with a monthly average of 50 or more full-time equivalent employees (FTEs) during the previous calendar year are considered ALEs and are subject to certain ACA regulations. Additionally, new employers that did not exist in the previous calendar year will be considered ALEs if they are reasonably expected to average and actually employ at least 50 full-time employees during business days in their first year of existence.
    • For companies with shared ownership, a controlled group may exist. A controlled group exists when companies have one or some of the same owners or companies are owned by other companies. When a controlled group exists, ALE status is determined by aggregating the FTE count of all companies within the controlled group. If the entire controlled group had 50 or more FTEs during the previous calendar year, ALL the companies within the controlled group are ALEs and should certify their ALE status independently during the TriNet ALE designation period. Further, failure to identify other controlled group members accurately can result in IRS Section 6056 Reporting (discussed in more detail below) inaccuracies. Thus, if you have questions or uncertainty about your ALE designation, contact your legal or tax advisor.

What this means for you:

  • If your company is an ALE, you must submit an ALE designation to TriNet. If you have not accurately designated your ALE status for 2023 (or you did not designate the ALE status for ALL of the companies you represent), contact Connect 360 at Connect360@TriNet.com or 800.638.0461 no later than December 1, 2023 to make this important update.

  • Benefits Eligibility – You should classify worksite employees scheduled to work a minimum of 30 hours weekly (on average) as “full-time regular employees” who will be eligible for TriNet-sponsored benefits. During the Benefits Strategy Solutions period, all clients should review worksite employees’ employment classifications to ensure accurate benefits eligibility.
    • If your company is an ALE, ensure worksite employees that are working 30 or more hours per week are classified as full-time regular, not full-time temporary, to avoid potential ACA penalties. Employees classified as full-time temporary are not offered medical coverage.
  • Employer Shared Responsibility Mandate—All ALEs are required to offer minimum essential coverage to at least 95% of full-time worksite employees, regardless of whatever the expectation is that they will be hired as temporary, and that coverage must meet certain standards, such as affordability, to avoid potential penalties.
    • If an ALE fails to comply with the Employer Shared Responsibility Mandate, the IRS may assess penalties.
  • To assist with the avoidance of such penalties, if your company has designated as an ALE and your company contribution strategy isn’t already compliant with the ACA’s affordability requirement, worksite employees will see a medical plan option with an employee-only coverage level contribution rate that meets the ACA’s affordability requirements using the Federal Poverty Level (FPL) safe harbor.
  • In order to meet the 2023 Federal Poverty Level (FPL) safe harbor and avoid potential penalties,
    • You will offer at least one plan to all FTE worksite employees, and
    • You will fund enough so that the maximum amount a worksite employee will pay does not exceed $103.28 per month (for the employee-only coverage level).
    • If your company has not designated as an ALE, the worksite employee contribution rate for all medical plan options will be based on the Benefits Strategy Solutions you select.
    • The Employer Shared Responsibility provision applies to ALEs at the start of each calendar year, regardless of when the company’s benefits plan year begins.
  • Section 6056 Reporting Requirements – All companies that are ALEs are subject to the annual IRS Section 6056 reporting requirements. As part of the TriNet ACA solution, if you submit an ALE designation to TriNet, we will coordinate the following on your behalf: :
    • Filing Form 1094-C and 1095-C with the IRS
    • Sending Forms 1095-C directly to worksite employees home addresses on file

For more information about the ACA , visit TriNet.com/affordablecareact.