The assessment is paid for every uncovered full-time equivalent employee. To find out how many uncovered full-time equivalent employees an employer has, an employer must do the following:
- Divide the total hours worked by all uncovered employees during a quarter by 520. No matter how many hours are worked by an employee in a quarter, no more than 520 hours can be assessed for one individual employee.
- Round down to the nearest whole number and then subtract 4. The reason 4 is subtracted is that the first four uncovered employees are exempt for all employers.
- The resulting number is the number of uncovered employees for which the employer must pay the assessment.
- Multiply the number of uncovered employees by the rate. The resulting number is the contribution the employer must pay to the Health Care Fund.
The HC-1 worksheet will walk employers through this calculation, both on the online form and on the paper form.
Please note: It is illegal to deduct any HCFC assessment paid from an employee’s pay.
First Four Uncovered FTEs Are Exempt
The first four uncovered employees are not subject to the assessment. This exception is incorporated into the calculation on the HC-1 so employers using that form do not need to do anything extra to make use of this exception.
- This means an employer with four or fewer full-time equivalent (FTE) employees will not have to pay any assessment, although the employer must still file a zero return.
- Four FTEs equal 2,080 hours worked in the quarter. Note: it is possible that the 2,080 or fewer hours could be worked by more than four part-time individuals.
- Employers must enter zero if they have fewer than five employees (i.e., 2,080 or fewer hours worked). Leaving the line blank on the WHT-436 could result in an assessment liability.
- Record keeping is only required if an employer has more than four FTEs.
“Hours Worked” Tracks With When Wages are Paid
“Hours worked” should track with when wages are paid whenever possible. This is so employers are not burdened with a new reporting requirement. Employers need only track when wages are paid to comply with the HCFCA statute.
Employers should note, however, that they are never required to report non-work hours, such as sick leave or vacation when determining hours worked.
Rate for the Assessment
The rate for the assessment for each uncovered employee changes annually. It is adjusted each year to equal any change in the premiums for the “second-lowest-cost silver-level plan in the Vermont Health Benefit Exchange.”
- In other words, the assessment changes every year (almost certainly upward because it follows insurance costs), and its rate tracks the cost of one of the relatively inexpensive plans on the Exchange.
- Every year, the rate will be updated and made available on our website and on the HC-1.
What Is an “Uncovered” Employee? Employers must pay the assessment for “uncovered employees,” which has a specific meaning for the HCFCA.
An employee is considered “uncovered” if:
- The employer does not offer health care coverage to any employees; or
- The employer offers coverage to some employees but not this particular employee (put another way, the employee is uncovered if they are not “eligible” for the coverage offered to other employees); or
- The employee is offered coverage but chooses not to accept the coverage and that employee has no other coverage, uses Medicaid, or purchases coverage for themselves on the Vermont Health Benefit Exchange; or
- The employee is part-time or seasonal and does not have coverage or uses Medicaid or has no HC-2 on file; or
- The employee declines an employer’s offer of coverage and has no HC-2 on file. An employee is covered for a calendar quarter if:
- The employer offers to pay part of coverage for the employee during any part of the quarter and the employee accepts the coverage or has some other coverage that is not Medicaid or a Vermont Health Benefit Exchange plan.
- The employee is enrolled in an employer’s plan but will not be covered for up to six months. However, the employee is uncovered if it will be longer than six months or the employee is not enrolled because they are in a probationary period.
Uncovered Employee Who Stopped Working During the Quarter
Any hours worked by uncovered employees who stop working during the quarter must be included in the calculation of FTE hours.
Uncovered Salaried Employees
Employers should use a reasonable estimate of the hours worked when determining the assessment liability for salaried employees with no set hours. The hours worked per quarter cannot exceed 520 hours for any individual employee.
Uncovered Employees Paid on Commission or Paid a Flat Amount
When determining the assessment liability for employees paid on a commission, or paid a flat amount for a specific job, use 520 hours if the job is full time. Otherwise, use a reasonable estimate not exceeding 520 hours.
Seasonal and Part-time Employees
Find out more about seasonal and part-time employees and other special employment situations.