Companies with 50 Full Time Employees/Equivalents: PART II

How Does an Employer Calculate the Number of Full-Time Equivalent Employees?

“Applicable large employer” status is determined based on the actual hours of work performed by employees in the prior calendar year.

Note: PPACA allows the calculation of full-time employees and FTEs based upon several different measurement periods. For purposes of this example, we are using a calendar year.

To determine “applicable large employer” status, an employer must:

  1. Count the number of “full-time” employees (including seasonal employees) who work on average 30 hours or more per week per month.
  2. Calculate the number of full-time equivalent employees by aggregating the number of hours worked by all non-full-time employees (including seasonal employees) and dividing by 120.
  3. Add the number of “full-time” employees and full-time equivalents calculated in steps (1) and (2) for each of the 12 months in the preceding calendar year, and
  4. Add the monthly totals and divide by 12. If the average exceeds 50 full-time equivalents, the employer must also determine whether the seasonal employee exception applies.

The seasonal employee exemption exists for employers whose workforce exceeds 50 full-time employees for no more than 120 days or four calendar months during a calendar year if the employees in excess of 50 employed during that period were seasonal employees. The four calendar months need not be consecutive. Until further guidance is issued, employers may use a reasonable, good faith interpretation of a seasonal worker, but the IRS emphasizes that the category of seasonal worker is not limited to agricultural or retail workers.

Note: This IRS regulation is confusing. BenefitMall is reaching out to the IRS to see if we can get a clearer explanation of when and how an employer may qualify for a seasonal exemption from the employer mandate requirement.

Are Hours of Service Computed Differently for Hourly and Non-Hourly Employees?

Hours of service for employees paid on an hourly basis should be calculated directly from records of hours worked and for hours that payment is due.  For employees that are paid on a non-hourly basis, the employer may use one of three methods:

  1. Count actual hours of service from records using the same methodology as hourly employees;
  2. Use a days-worked equivalency method that credits the employee with eight hours of service for each day that the employee would be required to be credited with at least one hour of service; or
  3. Use a weeks-worked equivalency of 40 hours of service per week for each week that the employee is credited with at least one hour of service.

PLEASE CLICK HERE for REEVA’S CONTACT INFORMATION

Read:

CLICK HERE TO SEE: Part III: Companies w/50 or More Full Time Employees/Equivalent

  1. If an Employer Has 50 or More FTEs, Does Coverage Have to be Offered to All Employees?
  2. What Type of Coverage Must an Employer Provide?
  3. How Will an Employer Know if Offered Coverage is Affordable?
  4. Is There Any Transition Relief Available?

CLICK HERE TO SEE: Part I: Companies w/50 or More Full Time Employees/Equivalent

  1. Start Preparing Now – 2013
  2. Who is Subject to Employer-Shared Responsibility Provisions?
  3. What if there are multiple companies with common ownership?
  4. Who Must an Applicable Large Employer Offer Health Benefits To?
  5. What Constitutes a Full-Time Employee under PPACA?
  6. What Constitutes a Part-Time Employee under PPACA?
  7. Per Diem or Non-Hourly Employees?

PLEASE CLICK HERE for REEVA’S CONTACT INFORMATION

Reeva Simon Rivkin, RHU, HIP, President, Rivkin Insurance Services; CA LicOB12353

Rivkin Insurance Services is a full service insurance agency specializing in Employee Benefits, Medicare Supplements, Medicare Advantage, Medicare Part D, Long Term Care Insurance, and Individual Health Care Insurance. We are here to help!

We are your advocate!

 

* The views expressed do not necessarily reflect the official policy, position, or opinions of Rivkin Insurance Services. This update is provided for informational purposes. Consult with a licensed accountant or attorney regarding any legal / tax matters discussed herein.

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