It’s a daunting task to determine if your business is required to comply with ObamaCare’s Affordable Care Act (ACA). In this third post of our series, ObamaCare Q & A, our guest blogger, Matt Lapointe, an attorney and ACA expert with Wetherington Hamilton, P.A. in Tampa, Florida, will clarify the definition of an Applicable Large Employer (ALE). Matt also helped us create a new report, ACA-ALE Status to crunch the numbers. Thanks Matt, for this ALE Q & A session.
Q. My office cleaning company has 60 part-time cleaners who work on average 20 hours per week. I also have 10 full-time supervisors, 3 full-time office staff (including my husband and me) and 2 full-time sales people. I know that ObamaCare’s Employer Mandate applies to companies with 50 full-time employees. We only have 15 full-time employees, so ObamaCare doesn’t apply to us, right?
A. WRONG. To determine whether an employer is an “Applicable Large Employer” or “ALE” the ACA rules require you to convert your part-time employees to “full-time equivalents” or “FTEs.” Under the ACA, “full-time” is 30 hours per week or more. To calculate your FTEs, you take the total number of hours worked by all your part-time employees in a particular month and divide by 120. In your case, assuming each of your 60 part-timers worked 20 hours per week in a particular month (60 x 20 x 4.3), the total hours worked for that month would be 5160. Next you divide the total hours for the month by 120. In your case, 5160/120 = 43 FTEs. Adding 43 FTEs to the 15 full-timers, you end up with a total of 58. You need to perform these calculations for every month of 2015 to determine whether, on average, your cleaning company employed 50 or more full-time employees over the course of the year. If it did, your company is subject to the Employer Mandate. Here is a chart that demonstrates the necessary calculations:
| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | |
| FT | 15 | 15 | 15 | 15 | 15 | 15 | 15 | 15 | 15 | 15 | 15 | 15 |
| PT/FTEs | 43 | 45 | 47 | 45 | 41 | 35 | 33 | 31 | 35 | 37 | 39 | 40 |
| Total | 58 | 60 | 62 | 60 | 56 | 50 | 48 | 46 | 50 | 52 | 54 | 55 |
12 month total = 651
Monthly Avg 651/12 = 54.25 = 54
Because 54 >50, the Employer is an ALE.
Chronotek has a new report, ACA- ALE Status, that helps to simplify the process of pulling together and understanding the numbers for customers of our telephone timekeeping system. As Matt mentioned, it’s important to remember that your definition of full-time is quite different from how the ACA determines your company’s full-time and full-time equivalent count. Our new report compiles these numbers automatically.
In our next post in this series, Matt will explain the meaning of “Affordable” in the Affordable Care Act. It’s not a random or subjective term and all ALE companies need to understand it’s specific directives. Stay informed. Subscribe to this blog or follow us on Facebook or Twitter.