As stated in a previous post to this blog, the Play or Pay mandate under the Affordable Care Act only applies to “large employers.” A large employer for this purpose is an employer that employs on average at least 50 full-time equivalent employees in the preceding calendar year. However, in the case of a new employer, large employer status is based on the reasonable expectation of how many full-time equivalent employees the employer will employ in the current year.
To determine full-time equivalent employees, an employer counts every employee that is reasonably expected to work on average at least 30 hours per week, or 130 hours per month, as one full-time equivalent employee. For every other employee, their full-time equivalent status is based on how many hours they work in a month, as compared to a 120-hour per month standard.
Takeaway: The first step in the Play or Pay analysis for employers is to determine whether it is a large employer under the Affordable Care Act. The analysis is only based on the number of an employer’s full-time equivalent employees. The analysis is not based on whether the employer is a government employer, for-profit employer, or non-profit employer, as all these types of employers are potentially subject to a penalty/tax under the Play or Pay mandate of the Affordable Care Act.