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Delta Dental Quoting

Employer contribution entered in Dental Contribution under Group Information affects the Delta Dental plans and rates returned. Please be aware that Delta Dental will require groups with 100% employer contribution to have 100% participation.

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ACA/Healthcare Reform

My client now has more than 50 employees, are they required to offer health coverage?

Not necessarily, but you will want to help them evaluate their situation carefully. The Affordable Care Act (ACA) requires that employers with an average of 50 or more full-time (FT) plus full-time equivalent (FTE) employees offer affordable, minimum value coverage to all full-time employees or they may be penalized. Employers that meet this employee count criterion are considered Applicable Large Employers (ALE’s).

Here are the key elements to consider:

  • Did the employer average 50 or more FT plus FTE employees during this year for the first time?
    • If so, then for next year, not this year, they will be considered an ALE and required to offer coverage to full-time employees as stated above.
    • Were they an ALE last year? If so, then they would have been required to offer coverage this year and each year thereafter until they no longer have 50 or more.
  • How do you calculate the average FT plus FTE count? Here is a good approximation:
    • Any employee working 130 hours or more in a month is counted as one FT employee.
    • For employees working less than 130 hours per month, sum their hours worked for the month and divide by 120. This is the FTE count.
    • Sum the FT and FTE counts to get the total count for a month. Sum total counts for a 12-month period and divide by 12 to get the average FT plus FTE count. If it is 50 or more for the first time, then the employer is an ALE and would be required to offer coverage in the following year or they may be penalized.

Returning to the original question, you can see how it is possible to have more than 50 employees and not be required to offer coverage. If, for example:

  • there is a high ratio of part-time to full-time employees, then the employer may have significantly less than 50 FT plus FTE employees when using the ACA’s method of counting and they would not be considered an ALE.
  • the employer exceeded 50 FT plus FTE employees for a small portion of the year, then their average FT plus FTE employee count will be below 50 and they would not be considered an ALE.
  • the employer is clearly exceeding 50 FT plus FTE employees for all months during the year for the first time, they will definitely be considered an ALE for next year, but not this year and would not be required to offer coverage until next year.

The calculation method described above provides an approximate count and is not to be used for final decision-making. Factors such as whether there are seasonal employees or if the employer is part of a controlled group, will impact the calculation. Claremont can assist with providing you and your client with an estimate by using standard payroll data. However, if it is a close call and the employer is near the 50 FT plus FTE employee threshold, it is strongly recommended that you engage with the company’s tax advisor or professional payroll vendor, both of which may offer ACA Large Employer compliance services.