In January 2015, an Employer Has 45 Full-Time Employees and 15

In January 2015, an employer has 45 full-time employees and 15 part-time employees.The part-time employees work an average of 20 hours per week.She offers no health insurance benefits to her employees.If his work force remains stable through out the year, what would be her tax penalty under the Affordable Care Act? What would it be if she reduced all full-time employees to part-time status in July?
a.First calculate fulltime employees and FTEs to determine if she is a large employer under the ACA: 15 part-time employees × 20 hours = 300 hours /30 = 10 FTEs
• 45 Full-time + 10 FTEs = 55 which is above the 50 Full-time/FTE threshold.
• The employer is a large employer under the ACA.
b.The penalty is calculated using only full-time employees (less 30): ((45 - 30)($2,000))/12 = $2500.
• If the work force is stable for the entire year then the annual penalty will be $30,000 ($2500 × 12).
c.What if she reduces all 45 full-time employees to part-time in July? First calculate fulltime employees and FTEs to determine if she is still a large employer under the ACA: 55 part-time employees × 20 hours = 1100 hours /30 = 36.67 FTEs
• 55 FTEs = 36.67 which is below the 50 Full-time/FTE threshold, hence after July 2015 she is no longer a large employer.However, she is still responsible for the period before July when she was:
((45 - 30)($2,000))/12 = $2500.At the end of 2015 she will be responsible for $15,000 in tax penalties ($2500 × 6).