Calculating Workforce Size is Especially Important for Employers

Most employers have fewer than 50 full-time employees or full-time equivalent employees. Therefore, they are not subject to the Affordable Care Act’s employer shared-responsibility provision.

If an employer has fewer than 50 full-time employees, including full-time equivalent employees, on average during the prior year, the employer is not an Applicable Large Employer for the current calendar year. Therefore, the employer is not subject to the employer shared-responsibility provisions or the employer information reporting provisions for the current year. Employers with 50 or fewer employees can purchase health insurance coverage for its employees through the Small Business Health Options Program, better known as the SHOP Marketplace.

Kenneth W. Rudzinski

Calculating the number of employees is especially important for employers who have close to 50 employees or whose workforce fluctuates throughout the year. To determine the workforce size for a year, an employer should add the total number of full-time employees for each month of the prior calendar year to the total number of full-time equivalent employees for each calendar month of the prior calendar year and divide that total number by 12.

Employers who have fewer than 25 full-time equivalent employees with average annual wages of less than $50,000 may be eligible for the small business health care tax credit if they cover at least 50% of their full-time employees’ premium costs and generally, after 2013, if they purchase coverage through SHOP.

All employers, regardless of size, who provide self-insured health coverage must file an annual information return reporting certain information for individuals they cover. The first returns are due to be filed in 2016 for coverage provided during 2015.

For more information, read Determining if an Employer is an Applicable Large Employer from the Internal Revenue Service’s website.


IRS Tax Tip, HCTT-2015-31.

For More Information:

Kenneth W. Rudzinski, CFP, CLU, ChFC, CRPC, CASL, CAP, a partner in the financial planning firm Heritage Financial Consultants LLC, is a registered representative and investment advisor representative with Lincoln Financial Advisors Corp., a broker/dealer (member SIPC) and registered investment advisor in Wilmington, Del. Rudzinski offers insurance through Lincoln affiliates and other companies. This information should not be construed as legal or tax advice. You may want to consult a legal or tax advisor regarding this material as it relates to your personal circumstances. CRN-1202049-051815. Rudzinski can be reached at

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