How to Define Your Full-Time Equivalents under the ACA

How to Define Your Full-Time Equivalents under the ACATime is running out for employers to comply with the employer shared responsibility provision under the Affordable Care Act (ACA), which goes into effect for employers with 50 or more full-time employees or full-time equivalents (FTEs) on January 1, 2016.

As the law currently stands, large group employers with 50 or more full-time employees or FTEs will be required by law to offer the minimum essential coverage to 95% of full-time employees. Minimum essential coverage cannot exceed more than 9.5% of an employee’s annual salary.

Here is how you can define full-time eligibles and FTEs for your organization:

  • Full-Time Employees: The law defines a full-time employee as someone who works an average of 30 hours or more per week, or an average of 130 hours or more per month. Any employee who works less than 130 hours per month is considered part-time.
  • Full-Time Equivalents: Part-time employee hours are combined to determine the number of FTEs. This number is calculated by adding the total monthly part-time hours and dividing that sum by 120.

It is important to calculate both these figures. If your business has more than 50 full-time employees or FTEs, you are considered a large group and are therefore subject to the mandate. If your business has fewer than 50 full-time employees or FTEs, then you are considered a small group and are exempt from the mandate.

In Massachusetts, there is ongoing discussion about whether the makeup of a small group employer will stay at less than 50 employees, or merge into the federal government’s definition of a small group with less than 100 employees. Congress is scheduled to vote on the issue on Monday, September 28.

For more information on how to calculate your number of full-time eligibles or FTEs, contact our PPACA certified agent, Jennifer Krog at 800-342-3859 or

*This article is written for informational purposes only and should not be construed as providing legal advice.