FAQ

The Affordable Care Act was created to make sure employers offer health coverage that provides some minimum coverage and is affordable. Employers that don't fall within these guidelines can face stiff penalties.

Here's how the IRS determines full time employment:

• Full time: Employees that work an average of 30 hours per week or 130 hours per calendar month, including vacation and paid leave of absence.
• Full time equivalent: Add up the number of hours worked in a month by part time employees (employees that work less than 30 hours per week), and divide by 120

Special considerations:

• Only employees working in the United States are counted.
• Volunteer workers for government and tax-exempt entities, such as firefighters and emergency responders, are not considered full-time employees
• Teachers and other education employees are considered full-time employees even if they don’t work full-time year-round.
• Seasonal employees who typically work six months or less are not considered full-time employees. This includes retail workers employed exclusively during holiday seasons.
• Schools with adjunct faculty may credit 2 1/4 hours of service per week for each hour of teaching or classroom time.
• Hours worked by students in federal or state-sponsored work-study programs will not be counted in determining if they are full-time employees.

A health care plan provides minimum value if it pays at least 60% of the cost of covered services (considering deductibles, copays, and coinsurance).

Coverage is considered "affordable" if employee contributions for employee only coverage do not exceed 9.5% of an employee’s household income.

Since employers typically do not have enough information to determine household income (including spouse income), there are 3 safe harbor methods to determine if a plan is affordable:

• 9.5% of an employee’s W-2 wages (reduced for any salary reductions under a 401(k) plan or cafeteria plan)
• 9.5% of an employee’s monthly wages (hourly rate x 130 hours per month)
• 9.5% of the Federal Poverty Level for a single individual