What is ALE (Applicable Large Employer)?
An Applicable Large Employer (ALE) is a term used in relation to the Affordable Care Act (ACA) in the United States. It describes employers that have 50 or more full-time employees, or full-time equivalent employees, in the previous year. ALEs must adhere to certain requirements under the ACA, which include providing affordable health insurance coverage to their employees.
Key Points About ALE (Applicable Large Employer):
1. Eligibility Criteria:
An ALE has 50 or more full-time employees or full-time equivalents (FTEs) during the previous calendar year.
The count of full-time employees generally includes those working 30 hours or more per week.
2. ACA Responsibilities for ALEs:
Health Insurance Coverage: ALEs are obligated to offer affordable health insurance to their full-time employees or face penalties for non-compliance.
Employer Shared Responsibility Payments: If an ALE fails to provide health insurance or offers coverage that is inadequate or unaffordable, they may incur fines under the ACA.
Reporting Requirements: ALEs are required to submit specific forms (e.g., IRS Forms 1094-C and 1095-C) to the IRS to report the health insurance coverage provided to employees.
3. Full-Time Equivalent (FTE):
To determine the total number of employees, ALEs can include **full-time equivalents** along with full-time employees. FTEs are calculated based on the hours worked by part-time employees.
Why is the ALE Designation Important?
Health Insurance Obligations: Being classified as an ALE imposes specific health coverage requirements under the ACA, which mandates offering coverage to at least 95% of full-time employees.
Penalties for Non-Compliance: ALEs that fail to meet ACA requirements may face substantial penalties.
Summary:
An Applicable Large Employer (ALE) is a business with 50 or more full-time employees or FTEs, and is subject to ACA mandates like providing affordable health insurance coverage.