By Helen Karakoudas | ACA Education Director, Integrity Data

ALE Math_Seasonal Workers_Integrity Data ACA ComplianceWhen counting heads to see whether a business is large enough to need to comply with the Affordable Care Act, a company has to start by looking at the service hours of every worker. But in the tally toward that all-important threshold for an Applicable Large Employer – 50 full-time employees, including equivalents – you can take some heads out of the ALE count.

The best known of head-count exclusions that can be taken is that for seasonal workers. The key thing to remember with this exclusion is the definition of “seasonal.” According to ACA regulations, the time over which these workers were employed can only be a period of 120 days or less.

Defining ‘seasonal’ workers

Santa's seasonal employees_Integrity Data ACA ComplianceIn our educational ACA for Santa video, Confused about the Affordable Care Act and Whether Your Business Needs to Comply? Santa Is Trying to Figure This All Out, Too, we use the example of three groups of elves employed by Santa at three different stretches of time during the year.

Only one group of elves at ‘No Coal for You’ Studio fits the ACA definition of “seasonal.”

  • The Painter elves, who worked over a 212-day period from 1/1/2014 to 7/31/2014, are not seasonal workers.
  • The Production elves, who worked over a 137-day period from 8/1/2014 to 12/15/2014, are not seasonal workers.
  • The Wrapper elves, who worked over a 54-day period from 11/1/2014 to 12/24/2014, are seasonal workers.

And although the Wrapper elves’ shifts makes for the only full-time schedule at No Coal for You – and they do bring the studio’s FTE count to above the 50 threshold, their head count of 60 is excluded from the head count for determining the company’s ALE status.

This exclusion is made because the season they worked was shorter than 120 days.

The differences this ACA exclusion can make

Head count calculation_seasonal workers_Integrity DataAs is the case with other exclusions from the ALE head count, this exclusion can make a difference for businesses teetering on the 50 FTE threshold. When the 60 seasonal workers were subtracted from the November and December 2014 FTE counts and those monthly numbers were then averaged for the ALE count, the ALE tally dropped from 52 to 42 – keeping ‘No Coal for You’ Studio from classifying as an Applicable Large Employer on its own.

Santa companies ALE count_Integrity Data ACA ComplianceFor Tax Year 2015, this exclusion can also make the difference in another threshold – as was also shown in the example for Santa’s companies.

When the head count of ‘No Coal for You’ Studio was combined with head counts from the three other Claus Resources companies (Shiny Nose Brigade, N Square Solutions, and Rent a Righteous Santa), the ALE count for the group was 99 – just under the 100 threshold.

This ALE status means that Santa’s companies do have to comply with the Affordable Care Act for Tax Year 2015 but will be spared the risk of coverage penalties for what they did – or did not – offer employees in 2015. That’s because, in early 2014, the IRS had pushed back the start of the penalty-assessment period for employers with 50 to 99 FTEs. Rather than it being January 1, 2015 – as it is for employers with 100 and more FTEs – it is January 1, 2016.

Resources to simplify understanding of ACA compliance

To learn more about ACA compliance requirements for companies in the 50-99 ALE range,

  • Tune in to our second ACA for Santa video, When Your Company Has to Comply with the Affordable Care Act, Are You Sure of What to Do and by When? Santa Is Trying to Figure This Out, Too.

To learn about other exclusions that can be taken from the ALE head count – and their effects,

  • Find a high-level view in first ACA for Santa video, Confused about the Affordable Care Act and Whether Your Business Needs to Comply? Santa Is Trying to Figure This All Out, Too
  • Dig into the weeds with these blog posts:

                     ACA math to check the need for compliance: Excluding owners from ALE count

                     ACA math to check the need for compliance: Excluding veterans from ALE count

                     How can a company under 50 FTEs still be required to comply with the ACA?

For a live demonstration of quick-to-deploy, cost-effective ACA reporting software, sign up here: https://attendee.gotowebinar.com/rt/4928422701838350593