A Publication of WTVP

Starting in 2014, employers with 50 full-time and/or full-time equivalent employees (FT/FTEs) will be considered “large” employers and required to offer affordable health insurance coverage or pay penalties. Employers need to examine their workforces now to determine their status under the Patient Protection and Affordable Care Act in 2014.

The provisions apply to the number of FT/FTEs during the preceding calendar year. A six-month transition rule, applicable for 2014 only, allows employers to use any six-month period in 2013 to calculate FT/FTEs. This gives them time to prepare for the new regulations.

Defining Full-time Employees and Equivalents
A full-time employee averages at least 30 hours of service per week or 130 hours in a calendar month. Full-time equivalent employees are calculated by dividing the total hours of service of all part-time employees for a month, but not more than 120 hours for any one employee, by 120. This number is added to the FTs to determine if the total is at least 50.

“Hours of service” determine whether an employee is FT or FTE, which includes:

Hourly and Salaried Employees
An employer must calculate hourly employee hours of service based on hours worked and hours of paid leave. For salaried employees, employers are permitted to use one of three methods:

Employers may use different methods for salaried employees under the Fair Labor Standards Act. In addition, they may change methods each calendar year. However, they are prohibited from using the days-worked or weeks-worked equivalency methods if the result would substantially understate hours of service.

Determining Full-time Status
Employers may use the current month-to-month method or the look-back measurement method to determine an employee’s full-time status. For month-to-month, employers need to set an employee’s status at the beginning of the month. The look-back method involves counting hours of service to determine if an employee has averaged at least 30 hours of service per week.

In conclusion, the information outlined here is merely an overview of the new rules. Many additional considerations apply regarding certain employee situations. It is imperative that employers accurately determine the number of FT/FTEs for purposes of deciding whether they will continue to offer healthcare coverage in 2014. iBi

Beth Auterman, CPA is an assurance partner at CliftonLarsonAllen with more than 20 years of experience providing assurance and general business consulting to a variety of clients. For more information, visit