HR Blog

The New Math - Counting for COBRA and FMLA

08/01/2016 | Dee Yingst

I have a simple math problem for you. If you have 2 apples and I give you 2 more, how many apples do you have? You don't have to watch Sesame Street to know that you now have 4 apples, right? Straightforward and simple.

But what if I changed "apples" to "employees"?? Would the answer still be four? Good question.

Because of the Affordable Care Act (ACA), employers have had to do a lot more counting lately: counting FTE (full time equivalent) hours, counting waiting, look-back, and stability periods, counting hours for seasonal employees, and so forth. While all that counting is very important; it's important that we don't let it overshadow the other reasons we need to count employees.

So the answer to our question is……maybe. It all depends on why you're counting.

"Wait," you say, "that can't be right. Is this some sort of 'new math'?? Are all of those hours of watching Sesame Street wasted??"  Not at all; it's just that different laws use different methods to count employees; for instance compliance with federal COBRA and FMLA. These two acts both have an employee count requirement for compliance – if you meet that minimum then the act applies to your organization.  So grab your calculator, your abacus, get your fingers and toes ready, and let's talk about counting for COBRA and FMLA!

For the uninitiated, COBRA refers to the Consolidated Omnibus Reconciliation Act. Simply put, this federal law arrived in the mid-1980s and requires group health plans to offer health insurance participants the ability to continue their insurance benefits on their own in the event they lose the coverage through their employer. This continuation coverage offer can be for the employee, the spouse and/or dependent children. Sometimes the coverage loss is due to a job loss or reduction in hours, sometimes due to divorce, or there may be a child who has exceeded the age limit on the policy – there are a number of different reasons that could trigger an offer of COBRA continuation coverage. [We're not going into the details of the law itself or how COBRA interacts with state law; for purposes of this discussion we're going to stick to counting.] Suffice it to say that it's a pretty big piece of legislation under an even bigger piece of legislation known as ERISA. So it's a big deal.

What we're going to talk about is how to know whether your organization meets the minimum employee count under federal COBRA – because this isn't as straightforward as you might think. We'll start by assuming that your entity is not one of those excluded from the law (don't worry, I'll give you the link to check for yourself if you're not sure) and then we'll look at the number of employees you have.  Note that I said "employees" not "employees enrolled in the health insurance" or "full time employees;" that's an important point to remember.

Here's how our friends at the Department of Labor explain counting for COBRA:

"COBRA generally applies to all private-sector group health plans maintained by employers that have at least 20 employees on more than 50 percent of its typical business days in the previous calendar year. Both full- and part-time employees are counted to determine whether a plan is subject to COBRA. Each part-time employee counts as a fraction of a full-time employee, with the fraction equal to the number of hours that the part-time employee worked divided by the hours an employee must work to be considered full time."

Got all that? So you could have 22 employees – 22 people with a pulse who show up to work every day – but not be subject to COBRA

Here's how: Let's assume that 10 of your employees are full time and the other 12 are part-time employees who work half the hours of their full time counterparts.  First multiply the number of part-time employees by the percentage of their hours as compared to full time employees. In this case the part time employees work 50% of full time hours: 12 x 50% = 6. Add those 6 to the number of full time employees (10) to get a total of 16. You are below the minimum for COBRA. If your numbers fluctuate and you tend to go over 20 some of the time, be sure you're paying attention to the other requirement:  "on more than 50 percent of its typical business days in the previous calendar year".

Next we'll shift our focus to FMLA.  FMLA is the Family and Medical Leave Act. In a nutshell, this act protects a worker's job when they need leave from work for a reason that qualifies under the act. Here again, we're not going to go into the details of the act. Suffice it to say that this act has far-reaching consequences for employees who need the leave and employers who don't comply. This particular act also has a fair amount of administrative work to achieve compliance so it's important for an employer to know whether or not the act applies to them. Again – it's a big deal.

First, we need to determine whether you are a covered employer (it's a little more complicated than for COBRA) and we again turn to our friends at the Department of Labor for insight:

The FMLA only applies to employers that meet certain criteria. A covered employer is a:

  • Private-sector employer, with 50 or more employees in 20 or more workweeks in the current or preceding calendar year, including a joint employer or successor in interest to a covered employer;
  • Public agency, including a local, state, or Federal government agency, regardless of the number of employees it employs; or
  • Public or private elementary or secondary school, regardless of the number of employees it employs.  (https://www.dol.gov/whd/regs/compliance/whdfs28.pdf)

(There is also a requirement that the 50 employees are within 75-miles and special rules for airline flight crew employees.) We'll start by assuming you're a covered employer. (If you're a public agency or a school, you can go grab coffee while we review this with the others since FMLA applies to your organization regardless of the number of employees you have.)

Unlike COBRA, FMLA is not concerned about full time vs. part time status. It is only concerned with whether the person appeared on payroll during that week. Remember we talked in COBRA about having a pulse and showing up? Well, FMLA doesn't even require the employee to show up – they just have to appear on payroll. Let that sink in for a minute. This would include someone on an unpaid leave, disciplinary suspension, etc. as long as you have a reasonable expectation that they'll be back someday (and if you aren't expecting them back, why are you keeping them on payroll??)

So you'll need to count the number of employees on payroll each week and determine whether your count went over 50 for 20 workweeks in either the current or previous calendar year (remember, these need not be consecutive).  If your count qualified you for FMLA last year, but your counts this year have dropped you are still subject to FMLA until you are able to show that you dropped below for a period that includes both the current and preceding calendar year.  So if you were over 50 last year but you're under 50 this year, you are still subject to FMLA.  Remember, it has to be current andpreceding year.

The Department of Labor has done a pretty good job of spelling this all out for both COBRA and FMLA on their website so be sure to check out the links above for more information.

Well, all this counting has made me hungry and since I gave you my apples I'll have to go find another snack. I could really go for a nice big cookie – a big monster-sized one. Now if only someone could tell me how to get to Sesame Street……