Averaging Full-time and Full-time Equivalent Employees and Why it Matters

For purposes of the Affordable Care Act, employers average their number of employees across the months in the year to see whether they will be an applicable large employer. This is important to do because two provisions of the health care law apply only to ALEs and are now in effect. These are the employer shared responsibility provision and the employer information reporting provision for offers of minimum essential coverage. In addition, self-insured ALEs – that is, employers who sponsor self-insured group health plans – have additional provider information reporting requirements.

Remember that the vast majority of employers will fall below the ALE threshold number of employees and, therefore, will not be subject to the employer shared responsibility provisions.

Here are definitions to three terms that are significant in determining whether your organization is an ALE. In general:

  • A full-time employee is an employee who is employed on average, per month, at least 30 hours of service per week, or at least 130 hours of service in a calendar month.
  • A full-time equivalent employee is a combination of employees, each of whom individually is not a full-time employee, but who, in combination, are equivalent to a full-time employee.
  • An aggregated group is commonly owned or otherwise related or affiliated employers, which must combine their employees to determine their workforce size.

To determine if your organization is an applicable large employer for a year, count your organization’s full-time employees and full-time equivalent employees for each month of the prior year. If you are a member of an aggregated group, count the full-time employees and full-time equivalent employees of all members of the group for each month of the prior year. Then average the numbers for the year. Employers with 50 or more full-time equivalent employees are applicable large employers and will need to file an annual information return reporting whether and what health insurance they offered employees. In addition, they are subject to the Employer Shared Responsibility provisions.

There are many additional rules on determining who is a full-time employee, including what counts as hours of service. For more information on these rules, see the employer shared responsibility final regulations and related questions and answers on IRS.gov.

For more information, see the Determining if an Employer is an Applicable Large Employer page on IRS.gov/aca.

No Author Biography has been linked to this Article.

Related Articles

June 6, 2021
By Brian D. Lynch, Bankruptcy Judge, Western District of Washington Five years ago, I wrote an article for this publication, “Measuring Success in Chapter 13,”1 where I criticized some media and academics for repeating an outdated and misleading statistic about the success of chapter 13 cases. So it was disconcerting to see John Oliver recently on Comedy Central’s Last Week...
Members
March 29, 2020
By Ken Siomos, Staff Attorney for Marsha L. Combs-Skinner (Newman, IL) A small part of the recently passed “Cares Act” is the ability of Chapter 13 debtors experiencing a “material financial hardship” as a result of the covid-19 pandemic to modify their plan to 84 months.i Many Chapter 13 Trustee’s are likely anticipating a series of Chapter 13 Plan defaults...
Academy Circle Logo Final
January 16, 2022
NCLC seeking non-profit organizations to sign two letters (one to the CFPB and one to FHFA, FHA, VA, and USDA) urging the agencies to require servicers to pause foreclosure activity for at least 60 days after being notified that a borrower has applied for HAF assistance and meets conditional program eligibility. We ask organizations to sign both letters, and the...
March 8, 2020
Rebecca A. (Becky) Herr was appointed Chapter 13 Standing Trustee for the District of Maryland on October 1, 2019 and maintains her offices in Annapolis. Ms. Herr’s appointment came on the heels of the retirement of Chapter 13 Standing Trustee Nancy Spencer-Grigsby. But Herr is no stranger to NACTT, The Academy, and the Chapter 13 Trustee community. So, let’s start...
Members
August 18, 2019
Taxpayers with expiring individual taxpayer identification numbers should renew their number ASAP. There are nearly 2 million ITINs set to expire at the end of 2019. Taxpayers with an expiring number should renew before the end of this year. This will help avoid unnecessary delays related to their tax refunds next year. ITINs are used by taxpayers required to file...
ahern_larry_regular
October 2, 2022
Introduction In In re Village Apothecary, Inc.,1 the Sixth Circuit recently cut an attorney's fee by half, where the services were not successful. The panel held that the results obtained (or, actually, the lack of results) justified the dramatic reduction of the fees of attorneys for a Chapter 7 trustee. In Part 1, we looked at . . . It...
Members
M Joseph Photo 2-1-22
November 5, 2023
“The focus of this article is to review some of the issues faced in cases with pending state court marital property division proceedings.”
Members
October 20, 2019
(First published here on August 19, 2019. Used with permission.) By Daniel Cohn, Esq., Legal Department, Wells Fargo Bank, N.A. General Rule: No Primary Residence Mortgage Changes The general rule in bankruptcy is that debtors cannot cram down loans secured only by mortgages on their primary residences. But wait, “what’s a cram down?” you ask. For non-bankruptcy folks, a cram...
Members
May 9, 2021
By Lawrence R. Ahern, III, Brown & Ahern (Nashville, TN) Introduction The Bankruptcy Court for the Eastern District of New York ruled last month, in a case styled In re Ajasa,1 that bankruptcy courts have subject matter jurisdiction to consider nationwide class actions that allege contempt of discharge injunctions. The broader effect of the opinion is that a discharge injunction...
Members
March 14, 2021
By Lawrence R. Ahern III, Brown & Ahern (Nashville, TN) Exemptions are determined at the time the debtor files for bankruptcy. … This maxim is called the "snapshot" rule because the debtor's financial situation is frozen in time, as if someone had taken a snapshot of it.1 Recent Caselaw The First and Ninth Circuits On March 1, the Ninth Circuit...
Members

Looking to Become a Member?

ConsiderChapter13.org offers a forum to advance continuing education of consumer bankruptcy via access to insightful articles, informative webinars, and the latest industry news. Join now to benefit from expert resources and stay informed.

Webinars

These informative sessions are led by industry experts and cover a range of consumer bankruptcy topics.

Member Articles

Written by industry experts, these articles provide in-depth analysis and practical guidance on consumer bankruptcy topics.

Industry News

The Academy is the go-to source for the latest news and analysis in the Chapter 13 bankruptcy industry.

To get started, please let us know which of these best fits your current position: