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Determining Group Size
Changes to the group size counting method
Effective Jan. 1, 2018, Michigan law stipulates that the counting method to determine group size will change to include both "full-time employees" and "full-time equivalent employees," also known as FTEs. Prior to this effective date, it was based on the number of "eligible employees."
Group size is determined each calendar year and generally depends on the average size of an employer's workforce during the prior year.
Group definitions in 2018
Small group
A group with 50 or less full-time employees, made up of both full-time employees and FTEs. Groups must consider all related entities, company divisions and locations to determine group size.
Large group
A group with 51 or more full-time employees, made up of full-time employees and FTEs.
Employee types
- Full-time employee: Someone employed on average at least 30 service hours per week – or at least 130 hours per month.
- Full-time equivalent employees: A calculated combination of all non-full-time employees, determined by an equation, as outlined below.
How to calculate the number of FTEs
Add the number of hours of all non-full-time employees for the month but do not include more than 120 hours per employee. Divide the total number of those hours by 120. This is your number of FTEs.
How to calculate the total number of eligible employees
Add the number of FTEs to the total number of existing full-time employees. This is how many eligible employees you have.
| Average number of full-time employees per month (30+ hours a week, or at least 130 hours per month) |
+ |
Average number of FTEs per month (hours of non-full-time employees as calculated above) |
= |
Total of eligible employees per month |
Example:
- ABC company has 30 full-time employees (employed 30 or more hours per week on average).
- ABC also has 20 part-time employees who each work an average of 15 hours per week.
- 20 employees × by 15 hours per week × by four weeks = 1,200. This is the total monthly hours worked by part-time
employees. - 1,200 hours ÷ by 120 = 10 FTEs.
- 30 full-time employees + 10 FTEs = 40 total eligible employees.
This change may affect group size. It may move some small group businesses to large group status. The size of your group may result in changes to:
- Government reporting requirements
- Health coverage requirements
- Potential tax credits
- Rating methods
- The types of plans available for purchase
HAP does not provide legal or human resources advice. However, we strive to help our clients by directing them to information that may be helpful. We encourage you to consult with an attorney or human resources professional well-versed in the Affordable Care Act.
We recommend employers review the following IRS web pages to learn more:
- General ACA employer information:
irs.gov/affordable-care-act/employers - How to determine your group size:
irs.gov/affordable-care-act/employers/determining-if-an-employer-is-an-applicable-large-employer - The definition of a small group enacted by the PACT Act:
cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/FAQ-on-the-Impact-of-the-PACE-Act-on-State-Small-Group-Expansion.pdf - Minimum number of eligible employees for a small group:
michigan.gov/difs/0,5269,7-303-13648_67046_77365_77366-389928--,00.html - How to determine full-time employee status:
irs.gov/affordable-care-act/employers/identifying-full-time-employees - Information on tax rules:
Small group: irs.gov/affordable-care-act/employers/affordable-care-act-tax-provisions-for-small-employers
Large group: irs.gov/affordable-care-act/employers/affordable-care-act-tax-provisions-for-large-employers
Choose HAP for all your small or large group needs
HAP's small group qualified health plans offer comprehensive benefits and comply with the Affordable Care Act. Our large group plans offer additional flexibility with a wide range of options. If you'd like to learn more, please contact your agent, your HAP representative or Health Alliance Administrators, Inc.