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How to calculate the number of full-time employees (FTE's) under the Affordable Care Act (ACA)

The term "FTE" stands for Full-Time Equivalent, which is a measure used to determine the number of full-time employees a company or organization has. Under the Affordable Care Act (ACA), often referred to as Obamacare, employers are required to offer health insurance to their full-time employees or face penalties.


To calculate FTEs according to Obamacare, you need to determine the average number of hours worked by your employees. Here are the general steps to follow:


1. Determine the measurement period: Choose a period of time to calculate the average hours worked by your employees. The measurement period can be up to 12 months but is typically a shorter duration, such as three to six months.


2. Identify employees to include: Determine which employees should be included in the calculation. In general, you should include all employees who are not considered seasonal workers or independent contractors.


3. Track hours worked: Record the number of hours worked by each employee during the measurement period. Include all hours worked, including regular hours, overtime hours, and paid time off.


4. Calculate average hours: Add up the total number of hours worked by all employees during the measurement period and divide it by the total number of weeks in that period. This will give you the average weekly hours worked.


5. Divide by 30: Divide the average weekly hours by 30, which is considered a full-time workweek under the ACA. This will give you the number of FTEs.


For example, let's say you have five employees who worked the following hours during a three-month measurement period:


Employee 1: 160 hours

Employee 2: 140 hours

Employee 3: 180 hours

Employee 4: 200 hours

Employee 5: 150 hours


Total hours worked: 830


Average weekly hours: 830 hours / 12 weeks = 69.17 hours


FTE calculation: 69.17 hours / 30 = 2.30 FTEs


In this example, you have approximately 2.30 FTEs, which means you would need to provide health insurance coverage to meet the requirements of Obamacare. Keep in mind that there may be additional factors and specific rules based on your location, industry, and the size of your organization, so it's always best to consult with a qualified professional or the appropriate regulatory authorities to ensure compliance with the ACA.

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