Horizon Business Solutions Clarifies Affordable Healthcare Act Compliance for Small Businesses with 50 and Under Employees

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“Much of the confusion surrounding the Affordable Healthcare Act is clarifying the definition of Full Time Employees or Full Time Equivalents (FTE),” says, Kim Bolin vice president at Horizon Business Solutions.

Affordable Healthcare Update 2014

Affordable Healthcare Update 2014

Much of the confusion is around clarifying the definition of Full Time Employees, Kim Bolin - HBS

With so much confusion on many levels around the Affordable Care Act (ACA), Horizon Business Solutions is providing small business owners a new resource “Defining and Calculating Full Time Employees or Full Time Equivalents,” to help them understand the requirements for providing affordable healthcare coverage to employees. The ACA law states that companies with 50 or fewer full-time employees (or an equivalent) are required to provide affordable healthcare coverage for employees or face a penalty as of October 1, 2014. Companies with more than 50 employees will need to start offering coverage as of 2015.

“Much of the confusion is around clarifying the definition of Full Time Employees or Full Time Equivalents (FTE),” says, Kim Bolin vice president at Horizon Business Solutions. “It’s not as straight forward as most business owners thinks. You can’t base your compliance around the number 50. It’s more complicated than that.”

To calculate the number of full-time employees, a business owner must take into account
         (a) all employees who work at least 30 hours per week for 6 months, and
             (b) all remaining employees (part-timers who work less than 30 hours per week.)

To determine the number of FTEs for a particular month, the employer must add up the number of hours of service for all employees who were not employed on average at least 30 hours per week for that month, and then divide that number by 120. The result is the number of FTEs for that calendar month. All fractions are disregarded for example, 49.5 full-time employees (including FTEs) for the preceding calendar year would be rounded down to 49 employees.

A current proposal however, suggests that business owners use a measurement period of 3-12 months for determining full time status. If an employee works on average 30 hours per week during a stability period (6 months) within the 3-12 month measurement period, they would be considered full-time status.

“We suggest that to ensure small business owners make the right total employee calculations and do not get penalized, to use a Full Time Employee calculator to determine their employee count, as well as determining the tax credit they’ll receive for providing the benefits,” says Bolin. Horizon Business Solutions will continue to provide clarity on the Affordable Care Act as new information becomes available. For more clarification on the definition of an FTE go to the IRS site.

Kim Bolin works for Horizon Business Solutions (HBS), a unique full service accounting firm providing small to medium size businesses with revolutionary ways to handle bookkeeping and accounting. For more information on Affordable Healthcare Act Compliance, call Kim Bolin at (614) 577- 1700 or email him at bkimbolin(at)horizonbiz(dot)com.

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