The definition of what constitutes an “applicable large employer,” or ALE, can have a significant impact on how that enterprise must arrange for and cover the cost of health care coverage. Be sure you know whether your organization qualifies as an ALE in the eyes of the federal government, especially the Internal Revenue Service.
The Affordable Care Act (ACA) requires ALEs to offer affordable, minimum value health coverage to their fulltime employees or pay a penalty. This employer mandate is also known as the “employer shared responsibility” or “pay or play” rules.
To qualify as an ALE, an employer must employ, on average, at least 50 full-time employees, including full-time equivalent employees (FTEs), on business days during the preceding calendar year. All employers that employ at least 50 full-time employees, including FTEs, are subject to the ACA’s employer shared responsibility rules, including for-profit, nonprofit and government employers.
A Full-Time Employee is an individual that works, on average, 30 or more hours of service each week. For this purpose, 130 hours in a calendar month is treated as the monthly equivalent of 30 hours of service per week.
Equivalent Full Time Employee counts are determined by looking at part-time employees. Hours worked by employees with fewer than 30 hours per week must be counted—and then divided by 120 per month—to determine the number of FTEs. The number of FTEs is then added to the actual full-time employee count
As you might expect, the definitions surrounding what constitutes affordable, minimum value health coverage can become intricate and technical, as well. But if you’re an ALE, it’s your responsibility to know the rules and abide by them.
Contact the Benefits Team at The Reschini Group for more information and guidance.
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The Reschini Group provides these updates for information only, and does not provide legal advice. To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.