Q: I have a business which employs 54 full time workers and 15 part time workers, and I am only now considering signing up for a health insurance plan. How is Obamacare going to impact my business?
A: This is a difficult question considering that Obamacare, also known as The Patient Protection and Affordable Care Act (“ACA”), is 961 pages long and that does not include the regulations that go along with the law which will be at least four times as long. In addition, many of the regulations do not go into full effect until 2014. However, there are some facts that employers should know now.
First, the law sets a limit in Flexible Spending Accounts for plan year 2013 of $2,500. Next, for those employees filing joint returns and earning $250,000 or more ($125,000 for single filers) there is an additional Medicare tax of 0.9% which the employer must deduct from the employee’s paycheck.
For companies such as yours, which is considered a “Large Employer” by the government, there are some more onerous provisions. Starting in 2014, an employer must determine how many full time employees (“Full Time Equivalent” employees or “FTE’s”) it has working for it to determine if it meets the threshold of 50 or more FTE’s. The answer is not as easy as you might think. According to the ACA, a FTE is one who works 30 or more hours per week. Note that the Bureau of Labor Statistics has always defined a full time employee as one who works 35 hours per week. With 54 FTE’s in 2014, if you do not offer health insurance, you must pay the government $2,000 per employee (excluding the first 30 employees) and an additional $2,000 for each new hire. In your particular situation, that is - 24 x $2,000 or a $48,000 penalty.
So let’s say you are thinking about demoting 5 FTE’s to part time to get under the 50 employee threshold, this will not do you any good. The ACA has thought of that so it calculates in the hours worked by part time employees as part of its FTE determination. The Congressional Research Service has stated: