The Affordable Care Act (ACA) mandate applies to companies with 50 or more full-time employees or full-time equivalent employees (FTEs). But what does that mean? The number involves an average of the number of full-time employees and part-time employee hours each month. So does it apply to you?
Step 1 of 3
Answer two quick questions to see where you stand — or use the worksheet below to compute your full-time-equivalent (FTE) count first.
Step 2 of 3
Count full-time employees plus full-time equivalents (part-time hours ÷ 120 per month), averaged over the prior year.
Result
While your business is not currently required to offer coverage, what happens when you win your next bid and see an increase in employees? Now is the time to create a long-term healthcare coverage strategy to protect your employees and your business.
Business considerations
Key questions
Step 3 of 3
You are required to offer health insurance coverage which meets both standards below. Do you have a plan in place that offers coverage meeting these standards?
Result
If your business does not offer acceptable healthcare coverage, you face non-deductible tax penalties equaling the lesser of an annual amount for each full-time employee receiving a government healthcare subsidy, or an annual amount per full-time employee (minus the first 30). These penalties are not tax deductible, and fringe dollars cannot pay for them.
Business considerations
Key questions
As of 2026
The statutory penalty amounts ($2,000 / $3,000 per employee when enacted) are indexed and change annually — confirm current-year figures with your compliance advisor.
Result
It's good news that you've already got your health insurance coverage in place. You can be proud that you're investing fringe dollars in your employees as opposed to spending extra on payroll taxes or penalties.
Business considerations
Key questions
Not sure of your count? Use the worksheet below to determine your large employer status.
For each month of the prior year, enter your full-time employees (worked or credited with 130 hours in the month) and the total hours of service for non-full-time employees (count up to 120 hours per employee). We'll compute your monthly FTEs and the annual average.
Average monthly FTEs
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Monthly FTEs = full-time employees + (non-full-time hours ÷ 120). Seasonal-worker exceptions and other special rules may change the result — talk to us to confirm your status.