How Many Full-Time Equivalent Employees Work For Your Business?

How does health insurance reform, known as the Affordable Care Act, affect your business? A good way to determine the answer is to look at how many full-time equivalent employees work for you.

Under the Act, “full-time equivalent employees” are generally defined as employees who work 30 hours per week. Your count includes employees who work for all businesses you own and control.

Caution: Your part-time workers may also be considered full-time equivalent employees. For instance, a part-time worker who puts in 130 hours of service in a month could be treated as a full-time equivalent employee because average hours worked meets the 30-hours-per-week requirement.

When you employ 50 or more full-time equivalent workers, you’re a large employer. Beginning in 2015, large employers may have to pay a penalty for failing to offer health coverage. In addition, there’s a separate penalty if you offer coverage that’s unaffordable, as defined by the law.

What if you employ fewer than 50 workers? The penalty provisions won’t apply, though you can choose to provide health coverage. If you do, and opt to buy the insurance through the new Small Business Health Options Program, you may be eligible for a federal tax credit. For 2014, you can claim up to 50% of the premiums you pay for health plans purchased through the program.

Contact us for more information about full-time equivalent employees, including an exception for seasonal workers and a safe-harbor measurement period that can ease your recordkeeping for employees who work variable hours.