How do you calculate FTEs for ACA purposes?

For each month, count your full-time employees (those who average at least 30 work hours a week) and add the full-time equivalent represented by your non-full-time employees. To calculate non-full-time FTEs, add their monthly work hours, limit each employee to 120 hours, and divide the total by 120. Then average the monthly totals over 12 months and round the result down to the nearest whole number.

How many FTEs make an organization an ALE?

An employer is generally an ALE if it averaged at least 50 full-time employees, including FTEs, during the previous calendar year.

Do part-time employees count toward the 50-employee ACA threshold?

Yes. Although they don’t work on a full-time basis, you must combine the hours your part-time employees work with those of your full-time employees to determine whether the total reaches the 50-employee ALE threshold.

Do seasonal employees count when calculating ALE status?

Yes, you must include seasonal employees in the calculation, unless you qualify for the seasonal worker exception. To qualify, your workforce must exceed 50 full-time employees (including FTEs) for no more than 120 days during the calendar year, and the employees above the 50-employee threshold during that period are seasonal workers.

What happens if my company becomes an ALE?

If your organization becomes an ALE, it becomes subject to the ACA's employer shared responsibility provisions. This means the employer must offer affordable, minimum-value coverage to at least 95% of its full-time employees and their dependents, or it may owe one of the two employer shared responsibility payments, which can be very costly.

What is the difference between an HMO and a PPO?

The main difference is provider flexibility. With an HMO, you generally have to use in-network providers for non-emergency care. You may also need a referral to see specialists. PPOs generally allow you to see specialists without referrals and provide some coverage for out-of-network care, although you'll usually pay more.

Which health insurance network type is best for individual coverage?

There isn't one network type that is best for everyone. The right choice depends on your preferred doctors and hospitals, how often you see specialists, whether you need out-of-network coverage, and your budget. When comparing individual plans, review the provider network, covered services, premiums, deductibles, and other cost-sharing requirements.

Can employees choose different health insurance networks through a CHOICE Arrangement?

Yes. A CHOICE Arrangement, formerly known as an ICHRA, allows eligible employees to choose individual health insurance coverage that meets their needs, subject to the terms of the employer's arrangement. This means employees can select plans with different network types, such as HMOs, PPOs, EPOs, or POS plans, rather than all employees enrolling in the same group health plan.

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How to calculate FTEs to determine your ALE status

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Interested in learning more?

Expert insights at your fingertips.

How to calculate FTEs to determine your ALE status

Types of health insurance networks

A guide to Open Enrollment for individual health insurance

Earning Accolades in Health Innovation

Remodel Health601 S. Meridian St.Indianapolis, IN 46225

Remodel Health
601 S. Meridian St.
Indianapolis, IN 46225