COLUMBIA, Mo. – This is the first year that the Affordable Care Act will require some businesses to offer health insurance.

“For employers that have 100 or more employees, the health insurance mandate kicks in,” said Brenda Procter, associate professor of family finance for University of Missouri Extension.

Companies with more than 200 full-time employees will have to automatically enroll all of their employees in the insurance that they offer, and then provide the employees the option to drop the health insurance.

Companies with 100 or more employees that do not offer health insurance that meets ACA requirements for affordability and minimum coverage, or don’t offer insurance at all, could face an employer shared responsibility (ESR) payment.

For businesses with 50-99 employees, the ESR payment will not go into effect until 2016.

Companies with fewer than 50 “full-time equivalent” (FTE) employees are not mandated to provide health insurance. If a company doesn’t have any part-time or seasonal employees, FTE is simply the number of full-time employees (those working 30 or more hours per week).

If your company has part-time employees, determining FTEs is a little more tricky.

For each month, you take the number of hours worked by part-time employees and divide by 120, then add the number of full-time employees, Procter says. That gives you the FTE number for each month. Finally, add the FTEs for each month and divide by 12. That gives you the company size under ACA rules.

For example, take a company with 35 full-time and 30 part-time employees. The part-timers each work 80 hours per month.

  • Full-time employees = 35
  • Part-time employees = (30 x 80)/120 = 20 FTEs
  • 35 full-time + 20 FTEs = 55 FTEs

Unless the FTE number is the same for each month of the year, you would then need to add FTEs for each month and divide the sum by 12. If the result is 50 or more, the Internal Revenue Service would consider your business a large company.

If you are a business that uses seasonal workers, that’s a different calculation.

“If you have seasonal employees for fewer than 120 days of the year and that’s the only thing that put you over the 50 employees number, for ACA purposes you’re still considered a small business,” Procter said.

Small businesses with 24 or fewer employees also are not mandated to offer health insurance. However, if they purchase coverage through the ACA health insurance marketplace, they could qualify for a tax credit.

“That’s actually been the case since 2010 and I think some businesses have missed that,” Procter said. “For businesses that are looking to get a tax credit now, they may want to have their tax professional look at prior years to see if they qualified.”

For companies that are mandated to offer affordable health coverage this year but do not, their ESR payment will be reconciled when they file their 2015 taxes next year.

More information about the ACA and small businesses (from

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