You’ve most likely begun your health care measurement period, if not already completed it, to determine how many full-time equivalent (FTE) employees your school employs. However, there still seems to be lingering confusion on blogs and forums across the Web. “Do I have to include our part-time employees?” “What does full-time equivalent mean?” “What is the stability period?” “How do we account for teacher-preparation time?” All of these are valid questions, and if you’re one of the struggling CFOs, hopefully this article will shed some insight on how you can manage your measurement period.
This measurement period is to help you determine from your controlled group how many full-time equivalent employees your school employs, and that your 2014 records capture all of the necessary information to identify them. If your records determine that your school employs 50 or more full-time equivalent employees after January 1, 2014, and you do not offer them health insurance that meets the minimum requirements, starting in 2015 you will have to pay a penalty.
OK, onward we go! Starting back in September (if not sooner), you should have begun your measurement period. This is an allotted time frame of 3–12 months, which in conclusion should determine how many full-time equivalent employees (FTE) your school has. According to the Affordable Care Act, employees who work 30+ hours a week are considered full-time. This can be a little tricky when measuring time for teachers because you’ll need to take into consideration their preparation time.
There is no government mandate for how much prep time a teacher needs for each hour of teaching. When calculating prep time, you must reflect on your school’s mission and values, and hopefully the policies that are clearly defined in your employee handbook. (If your school hasn’t defined teacher preparation time, we recommend that you determine, define, and communicate a set standard of time that matches your school’s values.) Bottom line: Be fair and make a good faith effort when caculating.
IMPORTANT NOTE: Employees who are determined to be full-time in the measurement period must be offered minimum benefits that are affordable for a specified period (6–12 months) known as the "stability period."
ANOTHER IMPORTANT NOTE: Employees who are determined NOT to be full-time in your measurement period may need to be offered health care coverage during the stability period if they become full-time. While still open for interpretation, it appears as though some part-time employees, when adding in prep time, will be considered full- time. They will need to be covered if the aggregate number of hours on-the-job plus prep time is 30 or more hours per week!
Now, let’s breakdown the math to see how a full-time equivalent employee is defined by the Affordable Care Act.
First, even though an individual may not be full-time per se, he/she must be used in your calculation of FTE (full-time equivalents). So, as an example:
- You have 40 FT
- You have 20 part-time staff members working on average 20 hours per week
How many full-time equivalents (FTE’s) do you have?
40, 60, 53?
The answer is 53!
Why? You have 40 FT; add to this {20 x 2/3 (20/30)} or 13. So (40 + 13) = 53 full-time equivalents.
YET ANOTHER IMPORTANT NOTE: Educational organizations may not account for (reduce) "employment break periods" of at least four consecutive weeks in duration when making calculations as to average hours of service, e.g., summer break.
With this data in hand, now you’re ready to make decisions about the health benefits you currently offer, or, if you don’t currently offer benefits but have determined that you employ 50+ full-time equivalent employees, what package(s) you’re going to offer.
Additional ISM articles of interest
ISM Monthly Update for Business Officers Vol. 12 No. 2 Preparing for 2014 Affordable Care Act Mandates
ISM Monthly Update for Risk Managers Vol. 3 No. 8 Understanding The Affordable Care Act (ACA)
ISM Monthly Update for Business Officers Vol. 11 No. 9 Preparing for the Health Care Reform Changes
