Determining Full-Time Employees Under the Affordable Care Act

This week, we’ve been talking primarily about how to properly calculate the amount of full-time equivalent employees (FTEs) you have working for you and their total number of hours worked as well as average annual wages as directed by the IRS. But as you begin looking at your employees, you may find yourself asking if there are certain workers that you should consider in your totals. So today we’re going to take a look at whether or not certain employees should be included in your total full-time employee count.

Seasonal Workers
When calculating your employees’ hours, seasonal workers generally will not factor into your total FTE count or average annual wage. Seasonal workers only perform labor or provide services on a seasonal basis, like retail workers who’re employed exclusively during holiday seasons. According to the IRS, it’s up to you to determine by a “reasonable, good faith interpretation of the term ‘seasonal worker’” who your seasonal workers are. Just keep in mind that if your seasonal worker provides services for more than 120 days during the year, they will need to be included in your total count.

Part-time Employees
Unlike seasonal workers, part-time employees are included in your total FTE count and average annual wage for the tax year. So include them when you’re tallying up your employees’ hours to determine how many FTEs you employ.

Leased Employees
Leased employees, like temps, are those employees you have who aren’t employees of your company but are providing services for your company through an agreement you’ve made with the organization who leases their services. When you calculate your FTE total and average annual salary, you will need to include your leased employees.

E-filing with ExpressIRSForms
Be sure to hurry and submit your ACA return with ExpressIRSForms as soon as possible - the deadline is tomorrow, June 30! If you have any questions or need assistance with your filing, you can contact our expert support team by live chat or phone (704-684-4751) Monday through Friday, 9:00 a.m. to 6:00 p.m. ET or send us an email anytime to support@ExpressIRSForms.com.

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Full-Time Employee Calculator for ALEs

We can’t stress how important it is to get the total amount of full-time employees (FTE) and full-time equivalent employees exactly right for your ACA compliance and reporting. The IRS, among answering many questions about who qualifies as an FTE, has provided a way to determine the amount of FTEs you have:

1. First, add up the total hours of service you paid wages to employees during the year (this shouldn’t exceed more than 2,080 per employee).
2. Next, divide that total by 2,080.
3. If your result is not a whole number, round to the next lowest whole number.
4. Unless the result is less than one, then round up to one FTE.

Calculating your employees’ hours worked this way helps with circumstances where an employer may qualify for the employer shared credit even if they have fewer than 50 actual full-time employees on the payroll.

For instance, if you have 48 individuals employed part-time, they could equal out to be 24 full-time employees, qualifying you for some credits.

ExpressIRSForms includes a full-time employee calculator within the program, as do ExpressACAForms and ACAwise. We’ve included as part of our continuing promise to bring you the easiest, most convenient solution in e-filing services. Use the FTE calculator to double check your own math, or let it do the work for you!

If you need help e-filing your ACA forms, give us a call Monday-Friday, 9:00 a.m. to 6:00 p.m. EDT, at (704) 684-4751, or send us an email anytime at support@ExpressIRSForms.com.

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Employee Eligibility: Determining Status Based on Hours of Service

One of the most important parts of ACA compliance is making sure you make the right offers of coverage to the employees who meet the right amount of hours as dictated by the IRS. Applicable Large Employers (ALEs) must offer at least the minimum amount of coverage as dictated by the ACA to their full-time employees, keeping in mind that the IRS considers 30+ hours a week (130+ hours/month) to be full-time.

So when counting up the hours of your employees, what hours do you need to take into consideration? Well, obviously just the hours the employee worked, right? Sort of. An employee’s hours of service include each hour for which the employee is paid and the hours for which the employee is entitled to payment but no job duties are performed. These hours can include:

• Paid Family and Medical Leave of Absence (FMLA)
• Vacation days
• Sick days
• Jury duty
• Military duty

When it comes to what not to count for hours of service, the ACA has an answer for that as well. Excluded from your total tally of hours of service are:

• Volunteer hours
• Work study program hours (performed by students, interns)
• Religious Orders
• In other words, you don’t need to count service hours for someone “subject to a vow of poverty” who is performing the duties usually required of an active member of the order.
• This exception is only used in calculating full-time status, not ALE status.
• Hours paid with foreign-source income

So when you determine the hours your employees have worked, you can do it one of three ways:

1. By calculating the actual hours of service each month for each employee (this may be more difficult for salaried employees)
2. By totalling the number of days each month the employee did eight (8) hours of work
3. By totalling the number of weeks each month the employee did 40 hours of work

ALEs can use any of these methods, but must pick one to stick to for the duration of the calendar year. You may change methods once the year is up. Methods 2 and 3 can both be used for classifying salaried employees, so long as the classifications are consistent. Methods 2 and 3 may not be used if their results understate the employee’s hours, causing them to be classified as non-full-time.

You can find more information for determining the hours of those who are difficult to identify or track (such as adjunct faculty, or those with layover or on-call hours) here.

Once you’ve determined your employees’ hours of service, it’s time to file those ACA Forms 1094 and 1095. You can do that through www.ExpressIRSForms.com. Simply create a free account to get started. If you need help or have any questions, give us a call at (704) 684-4751, Monday through Friday, 9:00 a.m. to 6:00 p.m. EDT. We’re also available 24/7 through email: support@ExpressIRSForms.com.



Looking for something a little less hands on? Try our full-service e-filing option, ExpressACAForms.

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Measurement Methods for Identifying Full-time Employees for ACA Purposes

One of the most important parts in ACA compliance is identifying which full-time employees to whom you’re required to make offers of health care coverage. First things first, however, you’ll need to determine if you’re an Applicable Large Employer (ALE). In other words, determine if you have 50 or more full-time employees. And keep in mind that the IRS considers 30+ hours a week (or 130 or more hours/month) to be full-time.

There are two methods for determining full-time employee status:

• The monthly measurement method
• The employer looks at each month the employee has worked individually to see which ones exceeded 130 hours of service
• The look-back measurement method
• The employee goes through a standard measurement period, where they work their usual hours as determined by the employee and employer upon hire.
• Then, the employer determines the employee’s full-time status based on the measurement period, during what is known as a stability period.
• Employers may not use the look-back method when determining ALE status, only for an individual employee’s full-time status.

When determining an employee’s status, an hour of service is considered to be each hour the employee is paid (or should be paid) for performing his/her duties as set by the employer, including the hours the employee is entitled to payment during which no duties are performed (like vacation pay, holiday pay, sick leave, disability, layoff period, jury duty, military duty, or leave of absence). For the purpose of the employer shared responsibility provisions, this does not include these hours of service/employees:

• Volunteer employees
• Students performing work-study
• Members of religious orders
• Compensation that isn’t US source income

You can find more information about totalling hours of employees in more nuanced categories, like adjunct faculty, those who work layover hours (like airline industry employees), and on-call employees, here.

If you have any questions regarding your ACA filing, you can give us a call at the ExpressIRSForms headquarters in Rock Hill, SC. We’re available by phone Monday-Friday, 9:00 a.m. to 6:00 p.m. EDT at (704) 684-4751, and we also offer 24/7 email assistance at support@ExpressIRSForms.com.




Looking for something a little less hands on? Check out ExpressACAForms, our full-service ACA e-filing option.

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