By - June 7, 2016

Managing ACA Compliance for Oil & Gas Manufacturing Industries

Oil and gas refinery

Compliance with the Affordable Care Act is an immense undertaking for a company of any size; for oil and gas companies, it can be particularly complex. The nature of petroleum companies means that they often oversee thousands of employees; to this point, these employees can vary widely in their responsibilities, pay rates, and overall job structure, from the top executives to seasonal rig workers.

Under the Affordable Care Act (ACA), all eligible full-time employees must be offered a healthcare plan. Due to the complicated employment structuring of oil and gas companies, they face a particularly steep challenge when it comes to determining healthcare plan eligibility, as well as reporting this information to the IRS for the purposes of ACA compliance certification.

Managing ACA compliance

There are numerous aspects of managing ACA compliance for an oil & gas company, all of which are essential for avoiding legal and financial penalties from the IRS.

One of the most critical tasks for determining health care eligibility lies in tracking the amount of hours worked. It’s commonly understood that the typical office worker is considered a full-time employee because their work week typically comprises 40 hours; however, the same cannot necessarily be said for shift employees out on work sites, or for contract workers that are paid per contract or per diem. Regardless, all eligible full-time (i.e. working 30 hours or more) employees must be offered an affordable health care plan under the law. Therefore, oil and gas companies must have a system in place for tracking work hours across all departments in order to ensure that they are operating within compliance for the ACA.

A second factor for establishing health care eligibility for ACA compliance lies in the official nation of the employee’s employment. For many oil and gas company employees, they may still officially be employed under a U.S. company despite working abroad, in which case they would need to be offered a health care plan (provided they meet the requirements for being considered a full-time employee). However, this is not necessarily the case when a U.S.-based company elects to hire workers from a country in which they are operating. The situation is often further complicated with employees who split time between the United States and a foreign country, or employees who have dual citizenships with the US and their host country.

Get ACA compliant or face fines

The fine for non-compliance with ACA ranges from $2,000 for failure to provide coverage per employee per year to $3,000 for inadequate coverage. If employers fail to report on the coverage they provide their employees, potential fines could range up to $3 million per EIN for a given calendar year. It should be noted that this maximum is only applicable in the event of unintentional compliance violations – the law does not provide a penalty maximum for repeated intentional violations of the mandates of the Affordable Care Act. This includes violations for both compliance and reporting.

For an oil and gas company, the level of complexity with regards to achieving ACA compliance cannot be understated. Many factors affect a company’s compliance status, and there are innumerable parts that influence an organization’s ability to stay within compliance year-after-year. To get a more in-depth look at ACA compliance for oil & gas companies, take a look at  our industry insight.

We’re here to help

At Tango, we are proud to have developed a whole system of best practices for helping oil and gas companies achieve and maintain compliance with the mandates of the Affordable Care Act. Our team of experts has the resources and know-how to help your company in a wide variety of areas, including ACA compliance, health plan decision support and benefits communications.

Contact us to learn more.


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