Applicable Large Employer Definition:
An Applicable Large Employer is an organization that had, on average, at least 50 full-time employees or an equivalent combination of full-time and part-time employees during the preceding calendar year. This calculation includes not only individuals directly employed but also those considered full-time equivalents (FTEs), which accounts for part-time employees collectively forming the equivalent of full-time positions.
How Does Applicable Large Employer Work:
To determine ALE status, employers aggregate the number of hours worked by all employees and divide it by the total number of hours considered full-time employment. If the result is 50 or more, the organization qualifies as an ALE. Once identified as an ALE, the employer must comply with ACA regulations, such as providing affordable healthcare coverage to eligible employees.
Key Features of Applicable Large Employer:
- Employee Count Monitoring: ALE status is assessed annually, based on the previous calendar year’s workforce data. Regular monitoring of employee hours is essential to ensure accurate calculations.
- ACA Compliance: ALEs are subject to specific provisions of the ACA, including the Employer Shared Responsibility Payment (ESRP) if they fail to offer affordable healthcare coverage to eligible full-time employees.
- Full-Time Equivalent Calculation: Part-time employees’ hours are converted into full-time equivalents to account for their impact on the ALE determination.
Best Practices of Applicable Large Employer:
- Accurate Recordkeeping: Maintain precise records of employee hours worked to facilitate ALE status calculations.
- Comprehensive Benefits Communication: Clearly communicate healthcare benefits to employees, ensuring awareness of eligibility criteria and coverage options.