The full-time equivalent measurement is used to determine whether or not your company is required to offer health insurance coverage, based on the number of employee’s working for you.
To do this, it adds the following:
- Number of full-time employees (employees that work at least 30 hours per week); and
- The hours worked by all part-time employees each week, divided by 30
For example, if you employ 40 full-time workers and 15 part-time workers that combined work 300 hours a week, you would have 50 full-time equivalent workers (40 + 300/30 = 50), and be required to offer health insurance coverage to eligible employees.
Note: Seasonal employees that work less than 120 days per year do not need to be included in your Full-time Equivalent calculation.
For more information, see How to Determine Full-Time Status and the IRS resource Determining if an Employer is an Applicable Large Employer.