The large-employer mandate, or “Employer Responsibility” as it is called in the Affordable Care Act, requires employers with 50 or more full-time equivalents (FTEs) to offer health coverage that meets certain standards or pay a penalty. This penalty has commonly been referred to as “pay or play;” however, many think of it more as “pay or pay.”
The most important thing employers can do with respect to this provision is to continually be aware of just how many employees they have at any point in time and of special terms defined by the law or subsequent regulations.
The FTE count is determined by adding the number of full-time employees (employees who work 30 or more hours per week) to the combined total of part-timers’ hours per month—averaged. For example, an employer may have 40 full-timers and 20 part-timers. If part-timers’ hours average 15 hours per week, they represent 10 FTEs (20 employees x 15 hours per week = 300 hours; 300 hours/ 30 hours per week = 10 FTEs). Adding the 40 full-time employees to the 10 FTEs, represented by the part-timers, produces a total of 50 FTEs. This employer, therefore, is subject to the employer mandate.
Employers with fewer than 50 FTEs are not subject to any mandate and can offer a health plan or not based on need and circumstance.
Large employers must be aware of the definitions and calculations given here to determine potential penalties or appropriate penalty compliance. Ultimately, it is the employer’s responsibility to know the counts and whether or not the employer mandate applies.
This information is provided by Brown and Brown of Indiana, LLC. For assistance with health insurance for your employees – or other types of insurance – call (317) 587-1117 or (317) 366-7501.