HCTT-2016-14: Averaging Full-time and Full-time Equivalent Employees and Why it Matters
Internal Revenue Service (IRS) sent this bulletin at 02/03/2016 03:30 PM EST
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Issue Number: HCTT-2016-14Inside This IssueAveraging 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:
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. Subscribe to IRS Tax Tips to get easy-to-read tips by e-mail from the IRS. Thank you for subscribing to IRS Tax Tips, an IRS e-mail service. For more information on federal taxes please visit IRS.gov. This message was distributed automatically from the IRS Tax Tips mailing list. Please Do Not Reply To This Message. |