(SCA, DBA, and Related Acts) ACA Compliance
Certain Provisions of the Affordable Care Act (“ACA”) And Compliance with the Fringe Benefit Requirements of the Service Contract Act (“SCA”), Davis-Bacon Act (“DBA”), and Davis-Bacon Related Acts (“Related Acts”)
1. What are the employer shared responsibility provisions and which employers are subject to them? The ACA added the employer shared responsibility provisions to the Internal Revenue Code. Generally, under these provisions, certain employers must either offer their full-time employees and their dependents health coverage that is affordable and that provides minimum value, or, alternatively, make a payment to the IRS if they do not offer that coverage and at least one full-time employee purchases a qualified health plan on an Affordable Insurance Exchange (“Exchange”) and receives the premium tax credit.
The employer shared responsibility provisions apply to applicable large employers (“ALEs”), which are employers with an average of at least 50 full-time employees (including full-time equivalent employees) during the previous year. The employer shared responsibility provisions first applied in 2015, but transition relief from certain requirements was available for 2015. Under one form of transition relief, an ALE with fewer than 100 full-time employees (including full-time-equivalent employees) in 2014 is not subject to the employer shared responsibility provisions for 2015, provided certain conditions are met regarding the employer’s maintenance of workforce and pre-existing health coverage. For an employer with a non-calendar year plan year, this relief extends to the months in 2016 that are part of the 2015 plan year.
For purposes of the employer shared responsibility provisions, a full-time employee is, for a calendar month, an employee employed on average at least 30 hours of service per week, or 130 hours of service per month. An ALE does not need to offer coverage to part-time employees in order to avoid an employer shared responsibility payment.
For purposes of the employer shared responsibility provisions, a dependent is an employee’s child (including a child who has been legally adopted or placed for adoption) who has not reached the age of 26. For this purpose, spouses are not considered dependents, and neither are stepchildren or foster children.