For purposes of the Affordable Care Act, employers average their number of employees across the months in the year to see whether they will be an applicable large employer. This is important to do because two provisions of the health care law apply only to ALEs and are now in effect. These are the employer shared responsibility provision and the employer information reporting provision for offers of minimum essential coverage. In addition, self-insured ALEs – that is, employers who sponsor self-insured group health plans – have additional provider information reporting requirements.
Remember that the vast majority of employers will fall below the ALE threshold number of employees and, therefore, will not be subject to the employer shared responsibility provisions.
Here are definitions to three terms that are significant in determining whether your organization is an ALE. In general:
- A full-time employee is an employee who is employed on average, per month, at least 30 hours of service per week, or at least 130 hours of service in a calendar month.
- A full-time equivalent employee is a combination of employees, each of whom individually is not a full-time employee, but who, in combination, are equivalent to a full-time employee.
- An aggregated group is commonly owned or otherwise related or affiliated employers, which must combine their employees to determine their workforce size.
There are many additional rules on determining who is a full-time employee, including what counts as hours of service. For more information on these rules, see the employer shared responsibility final regulations and related questions and answers on IRS.gov.
For more information, see the Determining if an Employer is an Applicable Large Employer page on IRS.gov/aca.