University of California, Riverside

Human Resources

ACA Employer Shared Responsibility Requirements

The UC Office of the President (UCOP) has announced changes as a result of the Employer Shared Responsibility provisions of the Affordable Care Act of 2010 (ACA) requiring that UC offer medical insurance to “substantially all” employees reasonably expected to average 30 hours of service (service hours) per week for 3 months or more. This will require significant changes to the University’s benefits eligibility rules, including the expansion to classes of employees previously considered ineligible, such as employees in Casual/Restricted and Per Diem appointments, and employees paid via By Agreement.

The Core Benefits Package will be offered if an employee is appointed at 75% or more or is expected to exceed 30 service hours/week during the measurement period.

I.   Related Resources

        1. How to Credit ACA Hours of Service in PPS for the "look-back" Measurement Period of November 1, 2014 - October 31, 2015 Guidelines for PPS Instructions.
        2. How to Credit ACA Hours of Service by Using Appointment Percentage for New & Ongoing Appointment Guidelines for PPS Instructions.

II. Definitions

            1. By Agreement (BYA): BYA is a method of paying employees using a flat rate and for whom no hours of service are typically recorded.  For the purposes of these ACA guidelines, references to BYA include all flat rate paid appointments.
            2. Casual Restricted Appointment (student):  A casual/restricted appointment is an appointment which is reserved for a regular student of the University of California.
            3. Core Benefits:  The Core benefits package includes Core Medical, Core Life, Legal, Accidental Death & Dismemberment (AD&D), Family Care Resources, and the Health/Dependent Care Flexible Spending Account (FSA).
            4. Hours of Service (service hours):  An hour of service is the time period for which an employee is paid for performance of duties, is paid for a period of time where no duties are performed, and the time period for which an employee is on one of three specific unpaid leave of absences.
              1. Paid Status - All service hours on pay status, including, vacation, holiday, sick, incapacity (including disability), layoff, jury duty, military duty, on call or paid leave of absence.
              2. Unpaid Status - All service hours on unpaid Family Medical Leave Act (FMLA), jury duty, and the Uniformed Services Employment and Reemployment Rights Act (“USERRA”) leave.
              3. Credit must also be given to employees with “employment break periods” of at least 4 consecutive weeks during which an employee might not work (but only up to 501 hours). Use the average number of Hours of Service recorded during the Standard Measurement Period.
            5. Measurement Period:  The Measurement Period is the 12-month time period in which benefits eligibility is measured.
              1. Initial Measurement Period (IMP) – The IMP begins with the first full pay period beginning on or after the hire date and continues for 12 months, ending with the pay period containing the one year anniversary of hire.
                • Example: an employee hired on April 18, 2015 & paid monthly, the IMP is May 1, 2015 to April 30, 2016. If paid biweekly, the IMP is April 12, 2015 to April 9, 2016.
              2. Standard Measurement Period (SMP) – The SMP occurs each year from 11/01/XX through 10/31/XX. For UC, the first SMP is 11/1/2014 - 10/31/2015.
                • Example:  A monthly paid employee's SMP is November 1, 2014 to October 31, 2015, and a biweekly paid employee's SMP is November 9, 2014 to November 7, 2015.
                • In recognition of differences in the academic calendar, the ACA regulations indicate that educational institutions must also give credit to employees with “employment break periods” of at least 4 consecutive weeks during which an employee might not be scheduled to work; however, the maximum service hour credit is 501 service hours. 
            6. Per Diem:  A Per Diem appointment is one that adds to or substitutes for career and limited appointments on a pre-scheduled basis or as needed on a day-to-day basis as determined by the University. Employees who hold Per Diem appointments may be scheduled, not scheduled or called off from a pre-established schedule. Specific titles have been identified as Per Diem (e.g., Nurse or Farm Worker). 
            7. Stability Period:  The Stability Period is the 12 month period in which employees have been determined to be eligible for Core benefits.
              1. Initial Stability Period – The 12 month period following 13 months of employment
              2. Standard Stability Period – The 12 month period following the SMP, January 1 – December 31
            8. Volunteer ("Bona Fide"):  A volunteer is an individual who is exempt from taxation and whose only compensation is in the form of reimbursement for reasonable expenses incurred in the performance of services, or reasonable benefits (service awards), and nominal fees.

III. Eligibility - By Agreement (BYA), Casual/Restricted (Student), Per Diems, UNX (DOS Code) and Volunteers

              1. By Agreement (BYA):  Employees paid via BYA will be offered the Core Benefits Package starting on the date of hire if they are expected to exceed an average of 30 service hours/week during the measurement period. In order to determine which employees are full-time under the ACA regulations, UC must begin to record the amount of hours of service by converting the flat rate to an equivalent amount of service hours. To mitigate the risk that BYA employees are not offered coverage, UC has made the decision that any employee with a BYA appointment only and zero service hours during the measurement period may be automatically offered Core Benefits.
              2. Casual/Restricted Appointments (student):  Student employees who exceed an average of 30 service hours per week in all jobs during the measurement period are considered “full time” employees and must be offered Core Benefits. All student appointments are covered under these provisions, including Academic Student Employees, Graduate Student Researchers, Students in Casual/Restricted Appointments, Resident Advisors ("RA's"), etc.
                  1. EXCEPTION: Hours of Service paid under Federal Work Study Programs are excluded from the 30 service hours/week calculation. 
              3. Per Diem Employees:  Per Diem employees should not be appointed at an artificially low level (e.g., 20% or 40%) when there is a likely possibility that the employee may exceed an appointment of 75%. To reduce the University's risk of not offering coverage as required, it is important to accurately estimate the appointment percentage so that the appointment percent and hours of service are not out of sync. 
              4. UNX DOS Code:  Employees paid using the UNX DOS code have been excluded from the benefits eligibility rules.
              5. Volunteer ("bona fide"):  Service hours performed as a volunteer ("bona fide") will be excluded from the calculation of hours of service when determining an employee's average weekly service hours during the measurement period. Title codes are excluded from the calculation of hours of service when determining an employee's average weekly service hours during the measurement period.
                • Title Codes 4329 or 4331 (Student Government)
                • Title Code 4412 (AmeriCorps)
                • Title Code 9920 (Student Volunteer)
                • Title Codes 2017, 2037, 2057, or 2077 (Volunteer Clinical Faculty)

IV. Offering Benefits vs. Enrolling in Benefits

Although ACA eligible employees must be offered Core Benefits, they are not required to enroll in the plan.  Employees with other coverage can continue to remain on their current health insurance. However, if they remain enrolled in their other coverage, and also enroll in Core Benefits, it is likely that the UC Core Benefits will be considered primary and other coverage will become secondary.  This dual coverage may cause problems if the secondary insurance is incompatible (e.g., Kaiser), or if the secondary coverage is more generous.

V. Measuring Full-Time Status 

UC has chosen to implement the “look-back” measurement method. For ease of administration, the concepts identified in the ACA’s look-back measurement method will be applied across-the-board to the University’s benefits packages (Full, Mid-level, and Core) eligibility rules, rather than only to the health plan coverage required by the ACA.

Under the look-back measurement method, a new employee’s benefits eligibility is determined in much the same way as UC does today – by evaluating each individual’s appointment percentage and duration. However, once an employee is ongoing, their eligibility for benefits will be determined by “looking back” at service hours during a standard measurement period (SMP). If an employee’s service hours during the SMP meet the threshold to be offered coverage, then that coverage must be offered, and if accepted, will be provided during the entire stability period, regardless of the employee’s number of service hours achieved during the stability period (as long as the individual remains employed). Example: an employee with 2080 service hours from November 1, 2014 – October 31, 2015 will be eligible for full benefits for the entire stability period of January 1, 2016 – December 31, 2016.

              1. BYA Appointments:  Departments paying employees via flat rates only (i.e., BYA) will need to develop a method to determine how many service hours should be credited to each employee. The IRS has acknowledged that for some employees, service hours are challenging to identify or track; nevertheless, all employers must find a way to credit reasonable and realistic service hours.  To assist in tracking Hours of Service for flat rate appointments, a new BYH Description of Services (DOS) code has been developed. 
                1. EXCEPTION:  Employees holding  benefits eligible appointments (i.e., DOS code REG) in addition to flat rate appointments (i.e., BYA) are excluded from the 30 service hours/week calculation, as they are already eligible for benefits.
              2. New BYH DOS Code:  In order to allow for the crediting of Hours of Service for By Agreement (flat rate) appointments, a new PPS DOS code, “BYH”, has been created. This new DOS code looks like any other PPS payment DOS code except it doesn’t issue any pay, it only records Hours of Service. BYA will continue to be used to issue payment and BYH will be used to credit the related Hours of Service. The BYH Hours of Service do not impact any other accumulations, such as the 1,000 service hours toward benefits eligibility, vacation, or sick leave accruals, career status, etc. The Hours of Service recorded using BYH only count toward measuring for purposes of the Employer Shared Responsibility requirements (i.e., Core Benefits eligibility).

                The BYH DOS code is flexible and can be set up on the employee’s EDB record (EAPP) with an appointment percentage, in which case the service hours associated with that percentage will be credited each payroll. Alternatively, it can be entered as a regular or one-time transaction (such as from a time sheet or PPS time entry screen) using either an appointment percentage or the appropriate number of service hours.
                1. BYH can be entered retroactively.
                2. BYH will process and credit Hours of Service even if the pay period has no actual dollar amount being paid to the employee.
                3. In addition to entering either the BYH Hours of Service or the appointment percentage, a BYH payment rate needs to be entered, but this is only a technical issue, as the payment rate is ignored.
                  • Example #1: Athletic instructor is paid by agreement, $1,000 each quarter, for a total of $4,000 over a year. The department considers this a 10% FTE project. The department may credit Hours of Service through any one of the following methods:
                    • Enter 4 BYH transactions of 52 service hours each at $1,000 concurrent with the 4 BYA payments or,
                    • Enter 1 BYH transaction of 208 service hours at $4,000 at any time during the measurement year or,
                    • Set up a BYH row at 10% FTE on the employee’s record in PPS on the date of hire, concurrently with establishing the BYA payment record.
                  • Example #2:  An employee is paid BYA, $2,000 per month. The department considers this a half-time (50% FTE) job. The department enters the BYA at $2,000 per month and adds a BYH distribution at 50% FTE and $2,000 monthly rate. Every pay period, the BYA DOS code will issue a $2,000 payment and the BYH DOS code will credit half of the service hours in the month (i.e., 88 service hours in June 2015).
              3. Causal Restricted (students):  The IRS provides no clear methodology for counting and crediting hours of service, and acknowledges that for some student employees, such as Resident Advisors (RA's), it may be difficult to determine if they meet the 30 hours of service per week standard. The IRS has instructed employers to use a “reasonable method of crediting service hours that is consistent with [Code] section 4980H.” While UC is still determining its reasonable method of crediting service hours for RA's, the following factors will be considered:
                1. Credit for any quantifiable service hours, such as scheduled “on duty” and desk hours of service;
                2. Credit for any quantifiable “on call” hours of service; and
                3. To the extent a significant component of the RA’s service hours cannot be quantified (i.e. the RA is generally expected to stay around the dorm with their door open, available to help out as needed), develop a reasonable method for crediting this time.
              4. Per Diem:  The measurement of average service hours for Per Diem employees is already underway, as their hours of service are captured in the payroll system as their appointment percentage.

VI. Procedure

            1. Develop and document a reasonable method of determining the appropriate appointment percentage of Hours of Service for each employee being paid via a flat rate (i.e., BYA). See the measuring full-time status guidance in section V above.
            2. Use the How to Credit ACA Hours of Service in PPS for the "look-back" Measurement Period of November 1, 2014 - October 31, 2015 Guideline for PPS instructions. No action is required for academic employees paid flat rate payments that are additional compensation over the REG 100% (i.e. stipends, flat rate summer comp). Input for the "look-back" period for academic employees will be coordinated centrally by Academic Personnel.
            3. Use the How to Credit ACA Hours of Service by Using Appointment Percentage for New & Ongoing Appointments for PPS instructions.
            4. Flat rate (i.e.,BYA) appointments that do not have the corresponding BYH field populated will likely result in the employee automatically becoming eligible for Core benefits during the employee's Stability Period.

Failure to comply with the ACA-Employer Shared Responsibility Rules may result in substantial penalties – estimated monthly penalty of $21.7 million for UC.

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