We’ve seen in the news lately how some large employers are reducing employee’s weekly hours to reduce healthcare roles and avoid paying fines for not offering coverage. Keep in mind that the rules define employees as full time equivalent employees, and there is some math involved.
Under the PPACA, employers with at least 50 full-time equivalent employees will be labeled as “large” employers. They will face penalties, beginning in 2014, if one or more of their full-time employees obtains insurance through a health care Exchange and qualifies either for a premium credit or a cost share reduction.
➢ A “large employer” is defined as one with more than 50 full-time equivalent employees during the preceding calendar year.
- Both full-time and part-time employees are included in the calculation;
- “Full-time” employees are defined as those working 30 or more hours per week;
- “Full-time” excludes seasonal employees who work less than 120 days during the year;
- Part-time employees’ hours as a group are included in the calculation also. Hours worked by part-time employees (those working less than 30 hours per week) are included by, on a monthly basis, dividing their total number of monthly hours worked by 120.
For example, a firm with 35 full-time employees (30+ hours), also has 20 part-time employees who all work 24 hours per week (so each employee who works 24 hours per week, works a total of 96 hours per month).
These part-time employees’ hours would be counted as the equivalent of having 16 full-time employees, as follows:
20 employees x 96 hours per month per employee /120
= 1920/120
= the equivalent of 16 “full-time” (30+ hours a week) employees.