Risk Management
Thursday | 29 November, 2012 | 11:36 am

Power of protection

By Jeffrey C. Terry & Sibyl C. Bogardus, J.D.

Health care reform in the United States - Guidance for metals companies

November 2012 The metals industry is a rich part of the history of the United States. As a legacy industry, health care coverage has been a time-honored benefit for most employees working in metals companies. Health insurance provides many advantages for participants but also has presented challenges for all industry groups. As a result of economic and political pressures, the United States enacted health care reform legislation, which was passed in March 2010. Following is an overview of some of the ramifications and some steps a metals company can take to protect itself from the forthcoming mandates. 

Reform provisions

In 2014, every U.S. employer with more than 50 full-time employees must offer affordable health insurance to its full-time workers. The cost burden of the  coverage mandate for all full-time employees may be staggering. 

Other components include 

State health insurance exchanges for small businesses and individuals will open.

 Most people are required to obtain health insurance coverage or pay a tax.

 Health plans no longer can exclude people because of pre-existing conditions.

 Employers with 50 or more workers that do not offer coverage face a $2,000 fine for each employee if any worker receives subsidized insurance on the exchange. The first 30 employees aren’t counted.

Am I subject to the law? Companies need to determine full-time employee count. You also must count the number of hours worked by part-time employees and decide how many full-time employees would have been needed to do that amount of work. If the sum of those two figures is more than 50, you are subject to the law.  Also include businesses with common ownership in the same controlled group. Ask your attorney or accountant for advice.mm-1112-risk-sidebar

How many hours must an employee work to be considered full-time? A full-time employee works at least 30 hours per week each month. The IRS says 130 hours of service in a calendar month is the monthly equivalent of 30 hours per week. Ideally, you will begin tracking the time worked by all part-time employees, as well. 

Who receives the health plan? Employees who meet the full-time criteria. The calendar 2013 hours worked by each employee will determine eligibility in 2014.  

Do I need to include a new employee who works an irregular schedule? The IRS gives you the option of not offering an employee health coverage for up to 12 months while you count hours to see if the employee is full-time. If full-time, you would offer the coverage for the matching time frame, generally 12 months, even if the employee’s hours decrease.  

Do I have to treat everyone the same? You can treat different types of employees differently. You might hire a new manager and know that person will be full-time. You can either offer health coverage immediately or defer health coverage until later.    

When does coverage begin? For someone assumed to be full-time at date of hire, you cannot make that person wait more than 90 days for coverage. If employees work variable hours (full-time equivalent), and you track their hours during the 

12-month period, you must offer coverage within 13 months plus some portion of a month. You’ll have time to do the calculations and provide enrollment materials. Later, you will transition employees to your standard 12-month determination periods. 

How do I take advantage of these rules? Amend your plan eligibility wording. You also need to set employees’ expectations on health plan eligibility. Moreover, you have to precisely document HR files with information about which category each employee fits into.  

Can seasonal workers be excluded? They can’t be permanently excluded from coverage; you must count their hours to determine if they are full-time. But, you will not have to offer genuinely seasonal employees the health insurance plan, even if they work full-time for more than 90 days.MM

Jeffrey C. Terry is senior vice president with HUB International Insurance Services in its Los Angeles office. HUB International is a top 10 U.S.-ranked insurance brokerage and risk management firm with headquarters in Chicago. Jeff has specialized in risk management consultation and insurance program design for the metals industry for more than 20 years. Jeff can be reached at This e-mail address is being protected from spambots. You need JavaScript enabled to view it . Sibyl C. Bogardus, J.D., is chief compliance officer, HUB Employee Benefits. Her areas of expertise include self-funded medical plans, federal health reform, HIPAA, ADA, wellness, employment and labor issues, COBRA, ERISA, FMLA, and Internal Revenue Code compliance.

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