Are You Required to File?

The first step you must take in regards to ACA is simply to determine whether or not you’re required to file. Typically, those companies who have 50 or more full-time equivalent (FTE) employees must file their 1094s and 1095s, as they are considered an applicable large employer (ALE). Whether or not you are self-funded or fully insured will alter the filing procedure somewhat. The flowchart below will assist you in deciding if you are required to file.

Calculating FTE Employees

If you’re on the fence about whether or not your company is an ALE (meaning it is at or above the 50 FTE threshold), consider the definition of a full-time equivalent employee. This can get a little tricky if you have a combination of full- and part-time employees. If you’re a current client of Dominion Systems, you can utilize our FTE calculator to find the number easily. However, if not that’s okay! Here is how you should do the equation:
 
For each calendar month, count all the employees who have worked 130 hours or more. These are your full-time employees.
 
Then, for the entire calendar month, you’ll add the hours worked by all employees who do not qualify as a full-time employee. You can only include up to 120 hours per employee for the month, so anyone who has between 121 and 129 hours will only have 120 hours included in the calculation. The remaining hours are simply dropped. Once you have all the hours worked by non-full-time employees, take that number and divide it by 120. This will provide you with the FTE of your part-time employees.  
 
The last thing you’ll have to do is add the number of full-time employees to the number of full-time equivalent employees you calculated above, and this will yield your total number of FTEs for that month. Do this for each month of the year, and then find the average number of FTEs for the whole year. This will determine whether or not your business is an ALE.
 
Now, it is important to note that if the result isn’t a whole number, you round to the next lowest whole number in order to get your accurate FTE count. So if your average number of FTE employees for the whole year is 49.5, you can count yourself lucky because you do not qualify as an ALE.
 
This might look like quite an arduous process, but once you plug all your employee information into a spreadsheet it’s just a matter of letting excel do the math for you. From there, you simply have to adjust hours worked each year while taking into account employees who have come and gone over the previous year. Keeping this document up to date throughout the year will make this process significantly easier during year-end. We suggest you update your files at least every quarter, if not once a month!
 
Once you have determined your FTE status, you either will or will not be tasked with reporting. If so, you will obtain ALE status. The important thing to note when reporting for 2016 ACA is that you are actually looking back at 2015 data. This means if you were over that 50 FTE threshold in 2015, you are required to report in 2016 for a 2017 reporting year. To put it a different way, you are pulling data from 2015 for a 2016 enrollment, and reporting that information in 2017.

Interesting in learning more about ACA? Check out our ACA Resources page!