In the Affordable Care Act (ACA), a key term is Applicable Large Employer (ALE). An employer is considered an ALE if on a monthly basis it averaged 50 or more full-time or full-time equivalent employees during the previous calendar year. A new employer is considered an ALE if it has or expects to have an average of 50 or more full-time or full-time equivalent employees on business days in the current year. Employees having healthcare through the military are excluded from these calculations.
If an employer is considered an ALE, it is subject to two important provisions in the ACA: the employer shared responsibility provisions, and the employer information reporting provisions for offers of minimum essential coverage.
To avoid the employer shared responsibility provisions of the ACA, an employer needs to provide its employees with both affordable and minimum value coverage.
- For a full-time employee, coverage is considered affordable if the lowest cost self-only only health plan is 9.5% or less of the employee’s household income.
- A healthcare plan is considered to provide minimum value if it covers at least 60% of the total allowed cost of benefits expected to be incurred.
This is only a summary of this aspect of the ACA. Follow the links below for more information from the IRS.