The Employer Mandate (http://www.uschamber.com/health-reform/employer-mandate) applies to so called “large employers” that employed an average of at least 50 full-time employees (taking into account “full-time equivalents” or “FTEs”) on business days during the preceding calendar year. Therefore, with the Employer Mandate taking effect January 1, 2015, whether or not a firm is subject to the Mandate in 2015 will be determined by the firm’s 2014 employee count.
For the purpose of the “50 or more” analysis, it will be necessary to determine the number of full-time employees and FTEs for each calendar month in 2014 and use these numbers to determine the average number of such employees on business days during that year. An employee is considered a full-time employee for a particular month if he or she is employed for at least 130 hours of service for the month and will accordingly be treated as a full-time employee for each business day of the month. For those employees who do not meet the 130 service hour threshold for a particular month, their total hours of service for the month will be added up and divided by 120 to determine a number of FTEs for the month.
After a firm determines the number of full-time employees and FTEs employed on each business day of 2014, it must then determine the average number of full-time employees and FTEs employed on business days during 2014. If this average number is 50 or more, then the Employer Mandate will apply for all of 2015. If not, the Employer Mandate will not apply during 2015. In either event, the firm will need to perform the same analysis for 2015 to determine whether the Employer Mandate will apply in 2016.
The following is an example of the “50 or more” calculation for a fictional firm called ABC Firm:
For each month during 2014, ABC Firm employs 45 full-time employees (i.e. all 45 are employed for a minimum of 130 hours of service for each month) and 20 part-time employees, each of whom is employed for 60 service hour per month. The 20 part-time employees are treated as 10 FTEs for each month (20 employees x 60 hours = 1,200 total hours / 120 = 10 FTEs). Adding these 10 FTEs to the 45 full-time employees for each month results in an average of 55 full-time employees and FTEs on business days during 2014, which means the Employer Mandate will apply to ABC Firm in 2015.
For more information on how your firm may be impacted by Healthcare Reform’s Employer “Play or Pay” Mandate, attend the educational session “Your Prescription for Healthcare Reform Headaches” from 3:45 to 5:00 PM on Friday, November 1, 2013.
Sheldon J. Blumling, Esq. is a partner with Fisher & Phillips LLP (http://www.laborlawyers.com/) and is a member of the firm’s Employee Benefits Practice Group. He advises clients with respect to all aspects of employee benefits and executive compensation, including qualified and nonqualified retirement plans, health and other welfare benefit plans, cafeteria plans, severance plans and equity-based compensation plans. He also advises employers on compliance issues involving the Health Insurance Portability and Accountability Act (HIPAA) and all types of federal and state employment taxes, and he has had extensive experience advising clients on the employee benefits and executive compensation aspects of mergers and acquisitions. Sheldon has been listed in Chambers USA, America’s Leading Business Lawyers since 2009.