Temporary Staff Health Benefit Charges – Affordable Care Act
Under the Affordable Care Act, effective January 1, 2015, employees who average more than 30 hours a week during a defined measurement period in the prior calendar year are eligible to receive health insurance while they are employed during the next full calendar year.
Unless specifically prohibited by the sponsor or award, these health insurance costs are allowable as direct charges on funds 500/510 accounts, assuming the costs are allocated appropriately.
Identifying the MFK and the HR Appointment
The cost of the additional health insurance will be directly charged to either the “primary” funding source of the individual’s HR appointment until the employee is terminated OR evenly (1/3 each) between three MFKs identified by the Department.
The UI Benefits Office identifies the “primary” funding source as follows:
- The MFK that has the highest percentage of salary/wage assigned (including multiple MFKs that are assigned for an employee with multiple appointments).
- For multiple MFKs with equal percentage, the first MFK listed will be used.
- At the request of the Department, a different primary MFK can be used OR three MFKs can be used.
The UI Benefits Office has been instructed by Grant Accounting to prohibit fund 500/510 MFKs from being used as the primary funding source when the HR appointment has multiple MFKs.
The MFK for the additional benefits will be reflected in the HR system with a separate appointment (also referred to as Company 2) under the individual’s University ID, with a new Employee ID and Job Code of UI2DEF. Institutional account, 5981-AffordCareAct Ben-dept funded, was established to identify these costs.
Charging the benefit costs
The health insurance will be provided to the employee every month until they are terminated. For employees who are paid on an hourly basis, the health insurance cost will be charged even if they do not work any hours in the given time period.
Only central units (Grant Accounting, AFR, and HR Payroll & Benefits) are allowed to do PayCVs that move only fringe charges. Since these health care benefits are set up with a separate appointment, they must be moved separately from salary/wage adjustments. If Departments need health insurance costs moved either to or from MFKs that include fund 500/510 account(s), Grant Accounting will make all of the entries associated with the change including non-500/510 accounts. To move costs that do not includes fund 500/510 accounts, the Department should contact the HR-Benefits Office (email@example.com) to request the adjustments.
For Grant Accounting to move the costs, we will need the Department to provide:
- Employee’s University ID
- Employee’s name
- MFK(s) where the costs were charged and MFK(s) where the costs should be moved
- Pay period(s)
- Amounts to be moved
- If the costs are moving onto a fund 500/510 account, a Cost Transfer Justification form will be required. However, if the costs will be moved over a period of time going forward, the Department can provide one form covering the entire period for the GAO file.
Allocating the costs
The method for allocating the fringe will depend on whether the Department utilizes a salary holding account.
- If a salary holding account is used, the health benefits should be allocated based on the actual pay of the individual for the time period. If the individual was not paid during the time period, the most recent HR Appointment information should be used.
- For all others, the allocation should be based on the HR appointment effective during the time period.
Requests from Departments to move fringe can be emailed to Sue Lampe (firstname.lastname@example.org).