The employer mandate is a year away, but that doesn’t mean you can ignore it. You need to determine now whether you will be affected by it later. Doing so isn’t as simple as it sounds. There are really two questions here:
1. Are you a large employer, as defined by the law?
And 2. If you are, to which employees do you have to offer health coverage?
Under the ACA, companies with 50 or more full-time equivalent, or FTE, employees are considered large employers and are required to offer health coverage or potentially face penalties starting in 2015. To calculate how many FTEs you have, you need to count both full-time workers (those who work an average of at least 30 hours a week) and part-timers. For example, if you have 30 full-timers plus 60 people who put in an average of 15 hours per week, you have 60 FTEs--and could face penalties if you don’t offer health coverage in 2015.
Keep in mind that you don’t actually have to offer insurance to the part-timers--only to your full-time workers. Also, understand that if you own or have a substantial ownership interest in more than one company, those companies are considered a single entity under the law, and the total number of FTEs across all those businesses will determine large-employer status.
For many businesses, employees come and go throughout the year, which further complicates the question of who is a full-time equivalent employee. For that reason, the law asks employers to pick a given measurement, or look-back, period to determine whether workers are full time. This period can be anywhere from three to 12 months--choosing the time frame is up to you. Just remember that the shorter the period, the more often you will have to count.
A 12-month look-back period is most convenient, says Paul Ashley, an adviser with FirstPerson, an Indianapolis benefits and HR firm. It also means that if your policy renews on January 1, you should already be counting, so you know who’s eligible for the company plan when open enrollment for 2015 starts next October.
The Small Business Guide to Obamacare
Part One: How to Notify Your Employees
Part Two: Get an Accurate Head Count
Part Three: Determine Whether You Should Offer Coverage At All