471 / How does an employer determine how many full-time employees (FTEs) it has for purposes of the employer mandate?

To calculate the number of FTEs for purposes of determining if an employer is an applicable large employer subject to the employer mandate, full-time is 120 hours per month. If an employer was not in existence during the prior calendar year, an employer is a large employer for the current calendar year if it is reasonably expected to employ at least 50 FTEs. If an employer’s FTEs exceed 50 for 120 days or less and the excess employees are seasonal workers, then the employer is not a large employer.¹

For purposes of the employer mandate penalty assessments (as opposed to determining whether the employer is an applicable large employer), the law defines full-time as 30 hours of service per week, and the regulations provide that 130 (not 120) hours per month is the monthly equivalent, both determined in the current month/year. To address the calculation difficulty concern, the regulations provide alternatives to a month-by-month determination.

For on-going employees, an employer has the option of using a “look-back measurement” method for determining current full-time status. The employer selects a measurement period of three to 12 months and calculates whether the employee on average had 30 hours of service per week (or 130 hours per month) during that period. If so, the employer must treat the employee as full-time during a subsequent “stability period,” which must be at least six months but no shorter than the length of the measurement period. Thus, if the employer used a 12-month look-back measurement period beginning on January 1, 2023, employees who are determined to be full-time must be treated as full-time for all of calendar year 2024.

An employer may also use an optional administrative period of up to 90 days between the measurement period and the stability period in order to determine which on-going employees are eligible for health insurance coverage during the subsequent stability period. However, the administrative period cannot create a gap in coverage. An employee who was enrolled in coverage must remain enrolled during the administrative period.²