What Employers Are Considered “Large Employers” under the Play or Pay Mandate of the Affordable Care Act?

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.

About Steve Brunn

Steve Brunn is an attorney in the Employment, Benefits, and Labor section at Briggs and Morgan, P.A. Steve primarily advises employers on employee benefit and compensation matters. For Steve’s full bio, click here.

Posted on March 19, 2013, in Employee Benefits, Health and Welfare Benefits. Bookmark the permalink. Leave a comment.

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