Posted on: 30 October 2017
Employers that have a few dozen workers may be near the threshold at which health insurance must be provided to employees. The Affordable Care Act (ACA) generally requires employers with 50 or more full-time employees to offer health insurance. For purposes of the ACA, however, the number of part-time and seasonal workers affects the tabulation of full-time workers.
Each part-time worker is counted as a partial share of a full-time employee. When several part-time employees are added together, the result can be an increase in the full-time worker count. If your company employs part-time or seasonal workers, those employees must be considered in the determination of whether or not you have 50 or more full-time employees.
Full-time equivalent employee
For purposes of the ACA, the equal measure of a full-time employee is referred to as a full-time equivalent employee (FTE). Two or more part-time employees can result in the addition of one or more FTEs. The potential requirement for your company to provide health insurance in the current year is based on your average number of full-time employees and FTEs in the preceding year.
Number of employees in the preceding year
The average number of employees for each month of the preceding year must be calculated first in order to determine the average for that year. During each month, an employee who works an average of at least 30 hours per week is considered full-time. Alternatively, an employee who works at least 130 hours in a month is counted as full-time for that month
Inclusion of part-time employees
An employee who is not considered full-time during a month is counted as part-time. To include part-time workers in each monthly calculation, add together the hours worked by all your part-time employees.combined. However, include no more than 120 hours for any part-time worker. Divide the total part-time hours by 120 to obtain the number of FTEs for that particular month.
The number of full-time employees and FTEs are added together for each month. The monthly totals are then added together, and that yearly sum is divided by 12 to obtain the average number of employees for the year. Even if your company is required to provide health insurance to full-time employees, you are not required to offer insurance to part-time employees.
There is a potential exception from the insurance requirement for seasonal employers. If your employment of 50 or more workers is concentrated in no more than four months of the year, you may be exempt from the insurance requirement. Contact an accountant for more information about employee payroll costs.Share