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Applicable Large Employer

What is an Applicable Large Employer (ALE)?

Applicable Large Employer (ALE) is an entity or employer having at least an average of 50 full-time employees including full-time equivalent employees (FTEs) in a calendar year and is liable to offer health insurance to its workers.

ALEs as per the United States – Internal Revenue Service (IRS)

As per Internal Revenue Service (IRS) in the United States, employers who are employing fewer than 50 full-time employees are not an ALE and that is eligible for Small Business Health Care Tax Credit. If an employer has at least 50 full-time employees in the preceding year, that is an ALE for employers shared responsibility provisions under the Affordable Care Act mandatorily providing health care insurance to its employees and it is liable for employer information reporting provisions.

What are a Full-time Employee and Full-time Equivalent Employee?

A full-time employee as per Law has served at least 30 hours in a week or 130 hours of service in a calendar month. Whereas the full-time equivalent employee is a group of employees, none of them is a full-time employee individually but combined they are equivalent to a full-time employee. This is calculated in two steps:

The adding to full-time equivalent employees (or part-time employees) is only for determination of the employer/organization/entity, whether it is an Applicable Large Employer or otherwise.

What is an Applicable Large Employer officially bound for?

An ALE is liable officially for, as mentioned below:

What is more about Applicable Large Employers?

The more about ALEs are:

How can be employer shared responsibilities payment calculated?

As inferred from the official website of the IRS, the following are the methods for the calculations of the employer shared payment responsibilities:

If an ALE member does not offer minimum essential coverage to its 95% of full-time employees (with the inclusion of their dependents) is responsible for the first type of employee shared responsibilities payment whereby the employer is bound to, if at least one full-time worker receives the premium tax credit due to purchase of coverage form the marketplace: annually this payment is equal to $2,000 (indexed for future years) per full-time employee, conditional to first 30 employees excluded from the calculation – this sort of calculation is based upon all the full-time employees (minus 30) with the inclusion of all full-time employees who have minimum essential coverage by the employer or from other sources – however, there is transition relief in such a payment on certain conditions

Whereas in another case if an ALE member does not offer minimum essential coverage to 95% of its full-time employees (and their dependents) is accountable for the second type of employer shared responsibility payment, conditional to that one employee is receiving premium tax credit due to buying of the coverage from the marketplace. One employee bought coverage from the market due to the coverage from the employer was not of minimum essential value, or was not affordable, or the employee was not one within the 95% of the employees whom the employer offered the coverage to annual basis the payment is equal to $3,000 (indexed for future years) but only for each full-time employee receiving a premium tax credit. This amount should not exceed the amount the employer would have owed had the employer not offered MEC to at least 95% of its full-time employees (and their dependents).

Who is not counted as Full Time Employee?

Following are the categories of employees who are not counted towards as FTEs:

However, an employer can avoid the ALE status if having seasonal workers provided: the employer workforce (full-time employees) exceeds 50 employees for 120 days or fewer, but the employees for 120 days were seasonal workers.