Applicable large employer calculator

A full-time employee, for any calendar month, is an employee who has on average at least 30 hours of service per week during that month, or at least 130 hours of service during that month. Full-time-equivalent employees are a combination of employees who are not full-time. For each month, the IRS method combines the hours of service of all non-full-time employees, counting no more than 120 hours of service per employee, and divides that total by 120. The employer then adds the full-time count and the full-time-equivalent count for each month of the prior calendar year, divides by 12, and, if the result is not a whole number, rounds down to the next lowest whole number. If that result is at least 50, the employer is an applicable large employer for the current calendar year. If it is fewer than 50, the employer is not.

A company that is not an applicable large employer is generally not required to offer health coverage under these rules, and is not subject to the related information-reporting provisions for the current year. Many still offer a plan, or use an ICHRA or QSEHRA. The employer coverage requirement page explains that in more detail. An applicable large employer need not offer minimum essential coverage to part-time employees in order to avoid an employer shared-responsibility payment; the part-time hours matter for the status test, not for who must receive an offer.

Two official exceptions can change the result. First, an employer is not considered to have more than 50 full-time employees, including equivalents, if the workforce exceeds 50 for 120 days or fewer during the calendar year and the employees in excess of 50 during that period are seasonal workers. Second, companies with a common owner, or that are otherwise related under certain Internal Revenue Code section 414 rules, are generally combined and treated as a single employer for the status test, even if each company would be under 50 on its own. A new employer that was not in existence on any business day in the prior calendar year uses a current-year test: it is an applicable large employer for the current year if it reasonably expects to employ, and actually does employ, an average of at least 50 full-time employees, including equivalents, on business days during the current calendar year. Federal law also provides that an employee is not counted toward the 50-employee threshold for a month in which the employee has medical care through the military, including TRICARE or Veterans' coverage, solely for this status test.