Our Benefits Blog

Health Care Reform Pay or Play Determining Employer Size

Posted by Tom Stonebraker on Feb 8, 2013 4:44:00 PM

So what is a large employer?

Unfortunately the health care reform law doesn't have a consistent answer, it changes based on what part of the legislation we are talking about.

Here are some examples:

  • W2 reporting it's 250 or more employees during the course of the year.
  • Automatic Enrollment 200 employees is our number.
  • SBC's, 60 Day Notice, $2,500 FSA Limit, Excessive Waiting Periods all groups.
  • Pay or Play Penalties it's 50 full-time employees, including full-time equivalents (FTE's)

Today Our Focus Is On Determining Employer Size Related To Pay Or Play Penalties.

To qualify as a large employer for "Pay or Play", an employer must employ on average at least 50 full-time employees, including full-time equivalents (FTEs) on business days during the preceding calendar year. Full-time means 30 or more hours of service each week. Hours worked by employees with fewer than 30 hours per week must be counted—and then divided by 120 per month—to determine the number of FTEs. The number of FTEs is then added to the actual full-time employee count.

Employers will determine each year, based on their current number of employees, whether they will be considered a large employer for the next year. For example, if an employer has at least 50 full-time employees, including FTEs, for 2013, it will be considered a large employer for 2014.

All employers that employ at least 50 full-time employees, including FTEs, are subject to ACA’s pay or play rules, including for-profit, nonprofit and government employers. Seasonal employees and employees working abroad can be excluded under certain circumstances.  Also there are rules for common ownership that can take a company that might otherwise be a small employer and move them to large employer status.

The employee size calculation will be used later in the series when we discuss affordability and penalties.  In fact we have a calculator/spreadsheet that looks at all of the variables in the "Pay or Play" equation and will tell you what if any fines your company might have.  My main goal today is to make sure you understand the concept so we can dig deeper later.

Action Items:

  • Calculate your total employees taking into account FTE's.
  • Understand the Transition Rule for 2014 and determine what periods you will use.
  • Review the common ownership rules if applicable.

Recommended Legislative Briefs:

  • Large Employers Subject to "Pay or Play" Penalties
  • "Pay or Play" Penalty - Identifying Full-time Employees
  • "Pay or Play" Penalty - Common Ownership Aggregation Rules
These Legislative Briefs will go into more detail on all of the topics discussed as well as examples and links to the actual legislation where appropriate.

Download your Pay or Play Penalty Employer Size Legislative Briefs

Topics: Obamacare, Affordable Care Act, ACA, Pay or Play

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