Who’s a full-time employee under the ACA?

The Affordable Care Act will change how employers handle health care. The forthcoming provisions, which will be officially enacted in 2014, require companies with 50 or more full-time employees to cover some medical expenses for staff members. 

A confusing point is the actual definition of "full-time" and how workers are counted for a business' total. To some employers, the term "full-time employee" refers to someone who works approximately 40 hours per week. 

However, that is not the definition used by the federal government under the ACA. According to the United States Department of Labor, any staff member who works an average of 30 hours per work or more is considered full-time

The ACA also sets forth the manner in which you should calculate an employee's status. The Internal Revenue Service explains that you must take the average time worked in your standard measurement period, which you can set for your company. The only restriction on this factor is that it must be between three months and twelve months, so you can't calculate a workers status based on a single month or multiple years. What's more, the measurement must be used for all staff members across the board, meaning that you can't change the variable from person to person. This will help ensure that employers cannot skirt the law by using different figures to calculate totals that are less than 30 hours per week. 

What about new hourly or seasonal employees?
The IRS goes on to note that companies that offer group health insurance to workers can extend coverage to new employees who are expected to become full-time based on the following factors. The standard measurement is used in conjunction with an administrative period, which can last no more than 90 days for hourly or seasonal staff members. That said, the sum of these two periods cannot be greater than 13 months. 

During the standard measurement period, employees must work an average of 30 hours per week, as with regular full-timers. Next, the workers enter the stability period, which is at least six months and can't be shorter than the sum of the standard and administrative periods. 

Hourly and seasonal workers who don't reach the 30-hour threshold during the initial measurement can be treated as part time during the stability period. Therefore, the employee is ineligible for health coverage and the company is not responsibly for offering healthcare. 

How the staff is counted
A large business, one with 50 full-time employees or more, is subject to sanctions under the ACA. However, the a company is categorized as "large" based solely on its number of full timers. The Federation of American Scientists explains that a business needs to the have "50 full-time equivalent employees." For the calculation, part-time workers are considered full-time, their hours are then added and averaged by the measurement period to determine how many people would actually work 30 hours per week within an enterprise. This means that a company that relies on a staff primarily comprised of part-time help may actually be a large employer and has to offer health coverage. 

How much coverage can cost
Finally, large employers must offer health coverage that meets certain standards. Specifically, a company cannot offer medical plans that cost more than 9.5 percent of an employee's household income. Any insurance plans or coverage options that exceed that threshold are "not considered affordable" for a worker, according to the IRS. This stipulation was put in place to ensure that staff members wouldn't be negatively affected by the ACA. 

However, because employers don't know how much an employee's household income actually is, they can qualify for safe harbors. Under these programs, companies don't have to make a payment if that expense is less than 9.5 percent of what the business pays a worker per year or meets the minimum standards for other safe harbors. 

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