In short, the Affordable Care Act has implemented a limited non-assessment period for employers, which establishes parameters on new hires. This requires an offer of company-sponsored health coverage to be offered no later than the first day of the fourth full month of employment.
At the end of the year, when employers must report to the IRS on coverage offers, in order to take full advantage of their options, offers of coverage should be offered on the first day of a month. The way the regulations are written reads that in order to say an employee was offered coverage during a month, it must have been made available for the entire month.
Along with the ACA, there’s another law to be aware of at this point, ERISA. The Employee Retirement Income Security Act of 1974 requires that employee health coverage must begin no later than the 91st day of becoming eligible for benefits. This is sort of a rock and a hard place for employers.
A Section 125 Plan is another topic that you might come across when looking at offers of coverage. These types of health plans allow employees to deduct their insurance premiums pretax and set aside pretax funds to use towards qualified medical care expenses. For employers, there is also a benefit: decreased payroll and tax liabilities for Medicare, unemployment and social security. In 2014, Section 125 Plans saved employers an average of $115 per participant in social security taxes alone. For employees, the caveat to this plan is that they are locking themselves into a plan for the full twelve-month duration. Generally, employees can only make a change to the plan under a special circumstance such as marriage, divorce, or child birth.
There is often a misconception of what day an offer is actually made. The clear-cut, correct answer, is that the offer of coverage must qualify as at least Minimal Essential Coverage or Minimum Value and the date the plan would be effective is the date of offer. The date Human Resources made an employee aware of the plan or the employee received a healthcare package in the mail is not the offer date.