Who is Classified as a Large Employer Under the New Health Care Rules?

1/28/2013 - By Lisa Fairbanks, CPA

50 employees.  Sounds simple, but when is 50 not really 50?  When the IRS is involved in the count!  The IRS has issued long-awaited proposed reliance regulations, under the Patient Protection and Affordable Care Act (PPACA), which define a large employer for purposes of PPACA:

A "large employer" is an employer who employed an average of at least 50 full- time employees (or full-time equivalent (FTE)) during the prior year.  

This definition is important because in 2014 the large employers will be required to either offer their employees health insurance coverage (meeting certain requirements) or pay a stiff penalty.  Most employers are going to know whether or not they are a "large employer", however, employers close to the 50 FTE employee threshold will need to count the hours of service to determine their FTE employee total. 

The regs define a full-time employee (FTE) as one who:

  • On average, was employed 30 hours of service per week;
  • Averaged 130 hours of service in a calendar month

 

*Part-time employee's service hours (those who average less than 30 hours a week or 130 hours a month) are combined, totaled, and divided by 120 to come up with any additional FTE employees

Also, if the employer has "related companies" those FTE employees are included in determining whether the employer meets the 50 FTE threshold.    

The PPACA penalties can be harsh, if you have any questions, please contact your Saltmarsh tax professional soon at (800) 477-7458!

-Lisa Fairbanks, CPA

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