Pay or Play? What Employers Need to Know About the Affordable Care Act


- What does the Affordable Care Act (aka “Obamacare”) require of employers in 2014?

Beginning January 1, 2014, every “large employer” will be subject to Affordable Care Act penalties if at least 95 percent of its full-time employees are not offered affordable health care coverage. A large employer is an employer that employed an average of at least 50 full- time employees during the preceding calendar year, including full-time equivalent employees. The testing period for 2014 is the 2013 calendar year, making 2013 a critical year for determining the need to provide coverage.

- Who is a full-time employee?

A full-time employee is one who works at least 30 hours per week.

- How do part-time employees count in determining whether an employer is a large employer?

For the purpose of calculating whether an employer is a large employer, the number of full-time equivalents is added to the number of full-time employees to determine whether an employer has 50 or more full-time employees. Full-time equivalents are calculated by combining the hours worked by part-time employees. Thus, part-time and full-time employees are added together in the following example: 40 full-time employees employed 30 or more hours per week on average plus 20 half-time employees employed 15 hours per week on average equal 50 full-time employees.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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