Affordable Care Act (ACA) Math of Employer Size

As of January 1, 2015, employers employing at least 50 full-time employees, (or a combination of full-time and part-time employees that is equivalent to 50 full-time employees) are considered Applicable Large Employers (ALE’s) and will be subject to the Employer Shared Responsibility Provisions under the Affordable Care Act (ACA).

Employers are required to determine each year, based on their current number of employees, whether they will be considered an applicable large employer for the next year.

Many accounting software programs such as Sage 100 Contractor have built-in features that calculate employee hours per month following the ACA guidelines. Here are some tips from the IRS website on how to calculate full-time and full-time equivalent employees.

Example 1 – Combination of Full and Part Time Employees:

40 full time employees and 20 part time = the equivalent of 50 full-time employees.

Example 2 – Seasonal Workers:

If an employer’s workforce exceeds 50 full-time employees (including full-time equivalents) for 120 days or fewer during a calendar year, and the employees in excess of 50 who were employed during that period of no more than 120 days were seasonal workers, the employer is not considered an ALE.

Example 3 – Average Hours per Calendar Month:

For purposes of the Employer Shared Responsibility provisions, an employee is a full-time employee for a calendar month if he or she averages at least 30 hours of service per week. 130 hours of service in a calendar month is treated as the monthly equivalent of at least 30 hours of service per week.

The total full-time or full-time equivalent hours worked will determine whether or not you are required to file Form 1095-C for each employee. Accurately tracking hours worked per month is required as of 1-1-15. Don’t hesitate to get your ducks in a row. Avoid non-compliance by keeping accurate records now.

Download Draft Forms 1095-C, 1094-C and other Affordable Care Act Forms here
Read our blog on the Model Exchange Notice here


Internal Revenue Service – Employer Shared Responsibility

United State Department of Labor – Employee Benefits Security Administration