What is an Applicable Large Employer?
What is the Definition?
An applicable large employer (ALE) is an employer with an average of at least 50 full-time employees, or full-time equivalent (FTE) employees, during the preceding calendar year. This definition was established by the Affordable Care Act (ACA) and is used to determine if an employer is subject to certain requirements of the ACA.
How Do You Calculate the Number of Employees?
In order to calculate the number of full-time employees, employers must combine the total number of full-time employees with the total number of FTEs. A full-time employee is an employee who works at least 30 hours per week or 130 hours per month. An FTE is a combination of two or more part-time employees that equal the hours of one full-time employee. For example, if two employees work 15 hours per week, they would equal one FTE (30 hours per week).
Which Employees Count Towards the Total?
When calculating the total number of employees, employers must include all full-time employees, regardless of where they are located. This includes employees working in the United States and abroad. In addition, employers must include part-time and seasonal employees, as well as temporary employees provided by staffing agencies.
What is the Penalty for Not Complying?
If an employer is classified as an ALE for the current year and fails to comply with the ACA’s employer mandate requirements, they may be subject to a penalty of $2,000 per full-time employee, excluding the first 30 employees. This penalty applies to any month during which the employer does not offer minimum essential coverage and at least one full-time employee enrolls in a qualified health plan through the Marketplace and receives a premium tax credit or cost-sharing reduction.
Are There Exceptions to the Rule?
Yes. Some employers may be exempt from the employer mandate, even if they have more than 50 full-time equivalent employees. These employers include religious organizations and employers with fewer than 25 full-time equivalent employees and average annual wages of less than $50,000. In addition, employers with fewer than 50 full-time equivalent employees may be exempt if they are considered “small employers” under their state’s law.
What is an ALE’s Obligation to Employees?
ALEs are obligated to provide certain benefits to their employees, such as health insurance coverage, paid leave, and retirement plans. ALEs must also comply with federal and state laws related to wages, overtime pay, and workplace safety. Additionally, ALEs must provide notice to employees about their rights and responsibilities under the ACA.
How Can ALEs Comply with the ACA?
ALEs can comply with the ACA by offering health insurance coverage that meets the requirements of the ACA, providing notice to employees about their rights and responsibilities under the ACA, and paying the applicable penalties or fees if they do not comply with the ACA’s requirements.
Conclusion
An applicable large employer (ALE) is an employer with an average of at least 50 full-time employees, or full-time equivalent (FTE) employees, during the preceding calendar year. ALEs are subject to certain requirements of the ACA, including providing certain benefits to their employees and complying with federal and state laws. ALEs can comply with the ACA by offering health insurance coverage that meets the requirements of the ACA, providing notice to employees about their rights and responsibilities under the ACA, and paying the applicable penalties or fees if they do not comply with the ACA’s requirements.