Who is a Full-time Employee under the Affordable Care Act?

by Michael Haberman on April 3, 2013 · 2 comments


The year 2013 is rapidly slipping toward 2014, the big year when the Affordable Care Act insurance coverage provisions take effect. There are still a lot of questions employers have. One of them is “Is my company covered?” That question is answered by determining how many full-time employees you have or, in reality, how many full-time equivalents (FTEs) are employed.

Making the count

The law covers employers who have 50 or more FTEs on their payroll. Under the ACA a full-time employee is defined as anyone who works more than 30 hours in a week. This is not the usual definition of what a full-time employee is for most of us, but for the purposes of this law it is. But the count does not end there. You also have to count the part-time employees who work fewer than 30 hours. You do that by summing the hours those people work and dividing that by 120 to get the number of FTEs for that month. You make this calculation for each month, add the months up, and then divide by 12 and that would give you the average number of FTEs for the calendar year. If that number is more than 50 then you are covered by the law.

Seasonal employees

Many employers use seasonal workers. This may inflate the number of FTEs for the months in which the seasonal workers are used. You are allowed to make allowances for the fact that these employees are seasonal. Basically seasonal employees who are working full-time for no more than 120 days of the year are not counted in the FTE determination. The language from the IRS reads: “If an employer’s workforce exceeds 50 FT employees 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 employees, the employer would not be an applicable large employer.”

You can find examples of calculations by visiting this page from the IRS.

When to measure

Beginning in 2014 the entire year is the measurement period. However, in 2013 according to the IRS “Rather than being required to use the full twelve months of 2013 to measure whether it has 50 full-time employees (or an equivalent number of part-time and full-time employees), an employer may measure using any six-consecutive-month period in 2013.  So, for example, an employer could use the period from January 1, 2013, through June 30, 2013, and then have six months to analyze the results, determine whether it needs to offer a plan, and, if so, choose and establish a plan.”

A last note

Many companies are small, which by that factor would not count for ACA purposes. But under the ACA they look at common owner ship and would add these companies together to get FTEs, even when the companies have different FEINs.

To get an overall view of the ACA see the infographic below supplied by Paycom.

A paid insert

A paid insert

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{ 1 comment… read it below or add one }

Greg Morris April 4, 2013 at 8:51 am

I’ve had several clients asking about this lately, so this will be a great resource for them.

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