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Keeping you informed about the rapidly changing ACA environment and how it’s affected by COVID-19

We know that workplace challenges often create the greatest stress on HR teams who are working diligently to keep their workforce healthy and safe. That's why we are committed to sharing what we know around regulatory changes and their bearing on health reform, insurance eligibility, payroll and more.

To keep you in the know, here's our Ask the Expert question of the week:

Q. During this historic time, what ACA considerations should a company heed when acquiring another business?

A: If your organization is acquiring another, it’s vital for you to understand that, from the date of acquisition, you’re liable for ACA reporting responsibilities for the employees you acquire. In these uncertain times, it’s also critical that you know how the acquired company is classifying the status of its nonworking employees and to determine if you are, in fact, acquiring those employees as part of the merger or acquisition. That is, have they been placed on unpaid or paid leaves of absences, furloughs, or been laid off? If they have been terminated, are you considering rehiring any of these employees within 13 weeks (26 weeks for educational organizations) of their termination? For more information on measuring ACA eligibility during leaves of absence, click here.

To devise an eligibility management and reporting strategy that can be implemented immediately upon acquisition closing, you’ll need a clear vision into the acquired company’s measurement periods, benefit offerings, and HR and benefit technology platforms.

Before you acquire a company, here's a list of things to consider or ask for:

  • Was the prior employer considered an Applicable Large Employer?
  • Are there any details in the buy/sell agreement that pertain to the employer responsibilities of the ACA around past ACA reporting filings, benefits and eligibility?
  • Was the Merger and Acquisition a stock or asset purchase?
  • Will you have access to historical employee data including benefits, HR, payroll, COBRA, or leaves of absence?
  • Can the acquired company provide prior period and current period measurement, administration and stability period data?
  • Did they share their IRS filing information?
  • Would they provide their collective bargaining or multi-employer union representative contact information and contracts?

It will be important for you, as the acquiring organization, to have the necessary historical information to accurately and effectively measure employees to determine if they average 30+ hours/week or 130 hours/month to qualify as full-time employees under the ACA – that is, to ensure that you’re making the necessary offers of coverage to avoid Penalty A, as well as to ensure that you can accurately calculate affordability safe harbors to avoid getting a Penalty B

Requiring newly acquired employees to complete an additional waiting period or initial measurement period (rather than treating them as ongoing employees) may put you at increased risks, especially if the acquisition was a stock purchase.

The best practice is to align the employees to their new, future measurement periods by using the acquired company’s data and coordinating the measurement periods of both organizations.

Have a question about the ACA?
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