Construction Industry High Risk for ACA Penalties

The goals of the Affordable Care Act included:

  • Creating more accessible medical care
  • Expanding the Medicare program; adjusting Medicaid
  • Increasing the number of insured Americans

Despite controversy and challenges, the ACA remains the most significant medical insurance overhaul in recent history. Its impact on construction industry healthcare has been notable for companies with 50+ employees.

ALEs (applicable large employers) are liable for ACA penalties. Trades with a higher percentage of penalties are healthcare, restaurant, staffing, and the construction industry. ALE status can change annually.

Payroll4Construction offers an example:

  1. In 2022, Company A has 57 full-time employees. It has ALE status in 2023.
  2. In 2023, Company A dropped to 46 full-time employees. It remains an ALE for 2023 but cancels its ALE status for 2024.

Trusaic CLO/EVP Joanna Kim-Brunetti says, “Some contractors have been shocked to receive ACA penalty notices from the IRS that are in the millions of dollars.” She says the construction industry is particularly vulnerable to ACA infractions because of:

  • Difficulty defining full-time employment among hourly shift-workers
  • High turnover/tracking difficulties
  • Non-centralized HR departments
  • Not documenting/tracking workers that decline healthcare coverage
  • Per-diem workers/multiple pay rates

If you haven’t been filing the ACA-required information with the IRS, taking this quiz could reduce your company’s risk of ACA penalties:

  • Do you employ variable-hour or part-time employees?
  • Do you have employees residing in…?
    • California
    • District of Columbia
    • Massachusetts
    • New Jersey
    • Rhode Island
  • Do you use the look-back measurement method?
  • Does your payroll provider run ACA-compliance software?
  • Has your business acquired any new entities since 2015? Do you plan to acquire new entities soon?
  • How do you determine ACA affordability?
  • How many payroll platforms do you use?

Your answers assess your risk of receiving an ACA penalty. Confusion about seasonal workers and ACA exceptions could be minimized using a monthly rather than a look-back measurement. To learn more, check out ACA Q&A.

You may be at high risk for lower profits if you don’t subscribe to Construction Monitor. Call 800.925.6085435.586.1205, or contact us.

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