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Thursday, October 9, 2014

ACA Shoes Start to Drop for Part Timers

By: Tommy Eden

Wal-Mart, who once embracing the Affordable Care Act (ACA) exchange system, earlier this week notified its 30,000 part time associates, those working less than 30 hours a week, that it will be ending their group coverage January 1, 2015. It also began opening up enrollment kiosks staffed by licensed brokers of in 2,700 of its stores as a heath care shopping alternative.

With this move, Wal-Mart manages to cut the cost of insuring 30,000 of their employees by forcing them to either a subsidized ACA policy, or in some states that expanded coverage, on to Medicaid. Alabama chose not to expand Medicare coverage.

Target Corporation, Home Depot and Walgreens have already announced that they are dropping coverage for part time employees.

Wal-Mart also said insurance premiums for its other employees will be increasing in 2015 by $3.50 for a total of $21.90 per pay period.

Beginning in 2015, the ACA will require businesses with 100 or more employees to offer affordable healthcare coverage to employees who work at least 30 hours a week or pay a penalty. The same requirement will be extended in 2016 to businesses with 50 or more workers. No reprieve is on the current political horizon.

Another significant ACA issue for those who use staffing company employees, is recent ACA IRS interpretations that a Client employer must be able to prove that its staffing company employees were offered affordable health care coverage. For purposes of the pay-or-play mandate, when the Client is the common law employer, an offer of coverage made by the temporary staffing firm "on behalf of" the Client employer will be considered to be an offer of coverage by the Client employer. For an offer of coverage to meet the IRS test, the Client employer must pay a higher fee to the temporary staffing firm for those employees who enroll in the temporary staffing firm's group health care plan. For example, if the staffing contract provides for a flat fee per employee placement irrespective of whether the employee enrolls in the staffing company's coverage, the employer will not be considered by the IRS to have made an offer of coverage. This could lead to a Client employer penalty under the pay-or-play mandate's $2,000 per full-time employee "no coverage offered" if more than 5% of its full-time employees (30% in 2015) are employed through the staffing agency.

Common Sense Counsel: Take these better late than never steps to protect your business from the looming ACA tsunami:
Step 1: “Strategically” decide to “Go or Stay Small”
Step 2: Count the Cost of non-compliance
Step 3: Update your employee handbook
Step 4: Give your employees a 2015 HSA
Step 5: Adopt a wellness plan
Step 6: Contractually Protect your Business
Step 7: Vote

Tommy Eden is a partner working out of the Constangy, Brooks & Smith, LLP offices in Opelika, AL and West Point, GA and a member of the ABA Section of Labor and Employment Law and serves on the Board of Directors for the East Alabama SHRM Chapter. He can be contacted at or 334-246-2901. Blog at with expanded Common Sense Counsel and follow on twitter tommyeden3