What makes a business or employer an Applicable Large Employer (ALE)?

A business is considered an Applicable Large Employer (ALE) under the Affordable Care Act (ACA) if it has an average of at least 50 full-time employees (including full-time equivalent employees, or FTEs) during the previous calendar year.

Here’s what that means in detail:

• A full-time employee is someone who works at least 30 hours per week or 130 hours per month.

• Full-time equivalent (FTE) employees are calculated by adding up the total hours worked by all part-time employees in a month and dividing by 120.

• If the sum of full-time employees and FTEs is 50 or more, the business is an ALE.

Why Does ALE Status Matter?

If a business is an ALE, it must:

1. Offer affordable health insurance that meets minimum essential coverage to at least 95% of full-time employees and their dependents, or face potential penalties.

2. Report coverage details to the IRS using Forms 1094-C and 1095-C.