Ask the Expert, Benefits

ACA Employer Responsibility Requirement (‘Play or Pay’)

We offer 100% of our employees health benefits. Are we still required to track Full Time Equivalents?

The Affordable Care Act’s (ACA) employer responsibility requirement (or the “play or pay” provision) does not require employers to provide healthcare insurance for their employees. Instead, it requires employers to share healthcare responsibility by either providing coverage or paying penalties.

More specifically, if the employer is an applicable large employer (essentially has 50 or more employees, taking into account both full-time employees and full-time equivalent employees in the calculation), then it would face penalties if it doesn’t offer health insurance coverage or if the coverage it offers is insufficient.

An applicable large employer for a calendar year is an employer that employed an average of at least 50 full-time employees per month during the preceding calendar year. An employer’s status as an applicable large employer for a calendar year is determined by adding together the total number of full-time employees (including seasonal workers) and full-time equivalent (FTEs) in each calendar month in the preceding calendar year and dividing by 12.

Employers generally track FTEs to determine whether they are applicable large employers subject to the play or pay provision. If an employer already knows its status regarding the provision, tracking FTEs may not be necessary.

For more information on the play or pay provision, please see BLR’s topic page at