The clock is ticking, and it might sound a lot like a time bomb if you’re not sure how to handle the Affordable Care Act. The ACA’s employer mandate takes effect for companies with 100 or more full-time equivalent employees on Jan. 1, 2015. This year, we’ll have an occasional series of posts about how to prepare for this legislation that’s new to all of us.
The employer mandate portion of the Affordable Care Act will apply to companies with 100 or more full-time equivalent employees starting January 1. But how can you tell if you’re in that group?
The official definition of a full-time equivalent employee (FTE) is one who has worked at least 30 hours per week during any given month of the year.
But what about staffing, where the size of the workforce can shift so much? Well, the IRS says:
Employers average their number of employees across the months in the year to see whether they will be an applicable large employer for the next year. This averaging can take account of fluctuations that many employers may experience in their work force across the year. The final regulations provide additional information about how to determine the average number of employees for a year, including information about how to take account of salaried employees who may not clock their hours.
So, in English: start tracking how many FTEs you have now, so you’ll have some idea of how many you might have next year.
To be an FTE, an employee must have worked at least 1,560 hours over a year (that’s 30 hours in a week x 52 weeks in a year). Divide that number by 4 to get the number of hours worked per quarter: 390. Then divide by 3 to get the number of hours per month: 130.
How can you track these numbers, by month, by quarter and by year? COATS! COATS has a report, the ACA Eligibility Estimates Report, that pulls the number of employees who are currently at FTE status. You can filter the data by any date range, any number of hours and any status.
That way, you’ll have some hard data in hand when it’s time to decide whether to offer insurance or pay the penalty for not offering it.
How are you preparing for the ACA?