An “Applicable Large Employer” or “ALE” must offer affordable, minimum essential coverage providing minimum value to its full-time employees. An ALE must also comply with health care reform reporting requirements.
An employer is an Applicable Large Employer if it employed an average of at least 50 full-time employees (including full-time equivalent employees) during the prior year. A full-time employee is an employee who has on average at least 30 hours of service per week during a calendar month.
To determine the number of full-time equivalent employees, the employer combines the number of hours of service of all non-full-time employees for the month (limited to 120 hours of service per employee) and then divides the total hours by 120. This large employer calculation differs from determining full-time status for offering health coverage, which is 130 hours per month.
Employers with common ownership (those who are treated as a single employer under Code section 414(b), (c), (m), or (o)) are considered one employer for determining ALE status. This grouping is called a “controlled group.” The employees of all employers within the controlled group are taken into account in determining if any member of the controlled group is an ALE. If, for example, a controlled group consists of 3 locations- one with 9 employees, one with 58 employees and one with 40 employees, each of the three locations will be considered an ALE member of the ALE group. That is because when added together, the number of employees in the controlled group as a whole is more than 50.
For reporting purposes, the name, and Taxpayer Identification Number of the largest 30 members of the ALE Group will be reported on the other ALE Member’s tax filing forms.
Employers should understand their size in order to comply with Affordable Care Act requirements.
