Federal law defines the number of employees as "the average number of employees employed by the employer's company during the preceding calendar year." It defines an "employee" as any person for whom the company issues a W-2. This includes full-time, part-time, and seasonal workers who may or may not have been eligible for your medical plan or covered by your group health insurance plan in the previous calendar year.
Depending on the number derived from the ATNE calculations, your company will either be considered a "Small Group" or a "Large Group", which will determine product availability, underwriting procedures, pricing methodology, etc.
To calculate ATNE, determine the average number of employees for each month, add each month’s number to get an annual total, and then divide by 12.
Add all the monthly employee totals together, and then divide by the number of months that the company was in business last year (usually 12 months).
Consider all months of the previous calendar year regardless of whether the company had insurance coverage or not.
Use the number of employees at the end of the month as the "monthly value" to calculate the year average. If the company is a newly formed business, calculate the prior year average using only those months that the company was in business. Use whole numbers only (no decimals, fractions or ranges).
Under the Health Care Reform law, an employee is any person that the company issues a W2 for whether full-time, part-time or seasonal, or if they get or don’t get medical coverage. Do not include individuals who get only 1099’s.
Make sure to count all employees, including those in different locations or divisions.
Here is an example
Total (Sum of) Employees = 132
Divide Total of Employees by Total Number of Months (12)