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For many Business Owners, Full Time Equivalent (F.T.E.) Parameters can be the deciding factor in health care coverage requirements

So you have more than 50 employees, but you consider some or all of them part-time. How do you figure out what your F.T.E. is according to the ACA Standards? Here are some things to consider:

  • The ACA considers any employee who works 30 hours or more a full-time employee.

What if their hours fluctuate from week to week? If they work an average of 30 hours a week over the course of the month, they are a full-time employee.

  • Seasonal Employees do not count.

Seasonal Employees are considered anyone who works for you less than 120 days in a calendar year and do not have to be included in your total employee number.

Employee/ FTE Easy Calculation Method:

  1. Use your last month’s account records, since they are the most recent picture of your business.
  2. Begin by adding up the total of hours of all part-time employees (those working less than 30 hours on average per month) over the course of the last month.
  3. Divide this number by 120*. This is the total of your Full-Time Equivalent. Round down; decimals do not count. This total is your F.T.E.
    (*120 is the minimum amount of hours one full-time employee would work in a month. For example, 30 hours a week over 4 weeks total 120 hours).
  4. Add together the total number of your full-time employees with your F.T.E. If the number is above 50, you must offer health insurance. If it is below 50, you are not required to.

Example

Jim’s Delivery Service has 25 full-time employees and 40 part-time Employees. He adds up the total number of hours his part-time employees worked last month and it came to 2,885.

2885/ 120 = 24.04
which equals 24 Full-Time Equivalent Employees (FTE).

Add his Full-time employees together with his FTE:
25+24 =49.

Jim’s Delivery Service employs below 50 FTE Employees and is not required to provide insurance. However, if business improves even a little bit in the year ahead, things may change. He might want to consider purchasing insurance while enrollment is open instead of waiting.

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