Health Care Reform
How many employees do you have?
It goes without saying that knowing how many employees you have is critical and a basic piece of information. Health Care Reform makes knowing how many employees you have and how you count them critical for purposes of determining what provisions are applicable to you. The following chart attempts to provide some guidance.
| If you have | Then you should be aware of the following | Effective date | Counting employees |
| Fewer than 25 full time equivalent employees (FTE) | Small employer tax credit | immediate | A qualifying employer must:
The number of an employer’s FTEs is determined by dividing (1) the total hours for which the employer pays wages to employees during the year (but not more than 2,080 hours for any employee) by (2) 2,080. The result, if not a whole number, is then rounded to the next lowest whole number. Refer to the IRS website for information on which employees are not counted for purposes of determining FTEs. The credit is worth up to 35 percent of a small business’ premium costs in 2010. On Jan. 1, 2014, this rate increases to 50 percent (35 percent for tax-exempt employers). Phase-out. The credit phases out gradually for firms with average wages between $25,000 and $50,000 and for firms with the equivalent of between 10 and 25 full-time workers. |
| 50 employees | Reasonable break time and a space for nursing mothers | immediate | Employers with less than 50 full time employees are exempt if it causes undue hardship.
DOL will define terms such as reasonable break time and significant difficulty or expense |
| 50 employees | Employer shared responsibility | 1/1/2014 | An “applicable large employer” (generally, one that employed an average of at least 50 full-time employees during the preceding calendar year) not offering coverage for all its full-time employees, offering minimum essential coverage that is unaffordable, or offering minimum essential coverage that consists of a plan under which the plan’s share of the total allowed cost of benefits is less than 60%, will have to pay a penalty if any full-time employee is certified to the employer as having purchased health insurance through a state exchange with respect to which a tax credit or cost-sharing reduction is allowed or paid to the employee. The penalty for any month will be an excise tax equal to the number of full-time employees over a 30-employee threshold during the applicable month (regardless of how many employees are receiving a premium tax credit or cost-sharing reduction) multiplied by one-twelfth of $2,000 (adjusted for inflation after 2014) |
| Less than 100 | Wellness program grants | 5 year program for fiscal 2011 through 2015 | Employers eligible to receive grants must employ less than 100 employees who work 25 hour or more per week and did not provide a workplace wellness program before enactment of the Affordable Care Act. |
| 100 | Simple cafeteria plan | 1/1/2011 | Employer employs on average fewer than 100 employees over the preceding two years |
| 200 | Automatic enrollment | Not clear | A covered employer that has more than 200 full-time employees and that offers employees enrollment in one or more health benefits plans must automatically enroll new full-time employees in one of the plans offered (subject to any waiting period authorized by law) and continue the enrollment of current employees in a health benefits plan offered through the employer. |
Disclaimer: This material is for the sole purpose of providing general information and does not under any circumstances constitute legal advice and should not be used as a substitute for legal advice. You should seek the advice of counsel when applying the requirements to your plan. For more information on this ErisaALERT contact us by phone at 610-524-5351 and ask for Mary Andersen or 973-994-7539 and ask for Theresa Borzelli.
