The passing of the Affordable Care Act has signified added responsibilities and new expenses for business owners, particularly under the provisions contained within the ACA Employer Mandate.
Businesses with 50 full-time employees (including full-time equivalents) and above must provide affordable health coverage to their employees and their dependents, or risk facing a tax penalty for each employee whose healthcare has to be subsidized by the government.
Businesses are facing the challenge of determining their employment status for the first time this year, knowing that they could be required to provide an employer-sponsored health plan next year.
Assessing Whether You Are an Applicable Large Employer
If you are a small to mid-size business that employs close to 50 employees, you may be interested in tracking your full-time staff count to measure whether your company will be considered as an applicable large employer or ALE.
Based on the size of your workforce this calendar year, you may be subject to the Employer Mandate the next calendar year. However, capping your total is more complicated than doing a simple headcount of your full-time employees and making sure the number is under 50.
In order to determine your total full-time employee count, you must establish the total number of full-time employees you have and the total number of FTEs you have (your part-time employees whose total hours of service average out to 120 hours a month). Both numbers are combined to create your total full-time employee count.
Calculating Your Total Full-Time Employee Count
The ACA considers employees that work an average of 30 hours per week or 130 hours of service per calendar month as full-time.
To determine their monthly status, employers count their full-time employees and then calculate their FTEs, which they can determine by adding up the total number of hours their part-time employees work and dividing that sum by 120.
They then add these two figures each month over a period between 3-12 months, called a Look Back Period. At the end of the period, employers add all the numbers and divide them by the number of months. Once they add up these two averages, if the total sum is 50 employees or higher, they are considered an ALE.
What to Do Once The Look Back Period is Over
Once the initial stage of the Look Back Period is over, (actually referred to as The Measurement Period) there are two more periods that follow – the Administrative Period and the Stability Period.
Once the first stage is over, employers have 90 days to determine their company’s status and to inform their employees of their eligibility if they calculate that they are an ALE. The employees are required to offer health benefits to are their employees who average at least 30 hours of work per week.
The next stage after that is the Stability Period, which is the period during which their employees are provided affordable healthcare. The Stability Period can be no less than the measurement period. At the end of the Stability Period, employers can look back and measure their employees’ status again.
An example of Basic ALE Determination
In order to illustrate how a company would calculate their workforce size, here’s a for-instance.
In this scenario, a company has 40 full-time employees and 30 part-time employees. They already know their full-time employee count for the month, but need to calculate the number of full-time-equivalent employees and add that to their full-time employee sum. If each part-time employee works 90 hours, their total combined hours = 2700 Now we have to divide that by 120 = 2700/120 = 22.5 Result: 40 FT employees + 22.5 FTEs = 62.5 Total FT employees
How FingerCheck Can Help
Once again, FingerCheck has made your life easier. In order to help you keep your full-time employee count under the ACA threshold, FingerCheck now provides free labor reports you can run to:
- Determine if your company qualifies as an ALE by taking into consideration your FTEs
- Determine when your part-time employees may be considered full-time based on their hours
- Forecast scheduled hours with future schedules to determine how close employees are to thresholds
- Ensure that your part-time employees are remaining under the appropriate hour’s thresholds
Now you can crunch the numbers and plan out your scheduling and staffing with just one click. Our reports automatically calculate your employer status, the status of your employees, and your total FTE count. Based on the data tracked within FingerCheck, you can customize your lookback period and view your numbers over time. Here is a breakdown of our latest reports:
- ACA Large Employer Summary (with a Crosstab option) averages your total full-time and your FTE count to determine whether you are an ALE
- FingerCheck’s ACA Status by Employee Report (with a Monthly Crosstab option) reflects your employees’ status in more detail and classifies employees as full-time or part-time based on their hours
- ACA Forecast By Employee forecasts the status of your employees for the month (either part-time or full-time), by assessing the scheduled hours they are supposed to work
Sample FingerCheck ALE Summary Report
Our new reports can be found in the Reports tab under ‘Company.’
In addition to our reporting tools, our Maximum Hours Policy sends alerts that notify supervisors whenever an employee reaches a certain number of hours worked each week and each month. This gives them notice ahead of time so they have room to adjust their employees’ schedules going forward.
In the future, there will be even more capabilities FingerCheck offers. Diligently tracking your staff’s hours over the course of a year can be an overwhelming task, especially if you have a large number of part-time or variable hour employees whose hours fluctuate from week to week.
In order to prepare your business for evaluation under the ACA Employer Mandate, FingerCheck provides you with the tools to calculate your full-time employee count so you can take preventative measures to refrain from being considered an ALE. The costs of non-compliance are hefty: a $2,000 penalty for each full-time employee (minus the first 30 FT employees) you have.
Our tools can help you avoid financial pitfalls and allow you to assess your company’s size at any given time in order to prepare your business for evaluation under the ACA.
If you run into any technical difficulties running the report, you can contact our support team at any time by emailing firstname.lastname@example.org or calling in for help at 1-800-610-9501.