Smarter Compliance

Any company that is deemed an ALE or Large Applicable employer.

If your company has 50 or more full-time employees (or full-time equivalents), you are considered an Applicable Large Employer (ALE) under the Affordable Care Act (ACA).

They must offer affordable health insurance that meets Minimum Essential Coverage (MEC) and Minimum Value standards to at least 95% of your full-time employees and their dependents. They also have to Report the insurance each year to the IRS and to your employees (using Form 1095-C).

The IRS can fine your company for failure to comply. Currently there are two standard penalties. Penalty A, which refers to offering insurance to the employees and Penalty B, which covers the level of coverage offered.

ACA penalty amounts are adjusted annually by the IRS and fall into two main categories:
-Penalty A applies when an Applicable Large Employer (ALE) fails to offer minimum essential coverage to at least 95% of its full-time employees. This penalty is assessed across the entire full-time employee population and typically amounts to approximately $2,900 per employee annually.

-Penalty B is triggered when coverage is offered but is either unaffordable or does not meet minimum value standards. This penalty is applied only for each full-time employee who receives a subsidy through the Health Insurance Marketplace and is generally higher—typically around $4,300 per employee per year.

source: https://www.irs.gov/affordable-care-act/employers/employer-shared-responsibility-provisions

A Full-Time Equivalent (FTE) is a calculation used to measure part-time employee hours as a proportion of
full-time work. Under the Affordable Care Act (ACA), the IRS uses FTEs to determine whether an employer qualifies as an Applicable Large Employer (ALE), which is generally defined as having 50 or more full-time employees or FTEs. One FTE equals 30 hours of work per week or 120 hours per month. This means that the combined hours of multiple part-time employees can count toward the 50-employee threshold, even if no single part-time employee works full time.

Our partners are happy to review your status for free. All we need is a simple payroll report.

We recommend using this resource provided by the IRS as a resource, and our team of professionals is here to sort out the details. Don't stay stuck: simply send us an email to get in touch.