ACA Compliance
Large Employer Requirements
Businesses with 50 or more full-time equivalent employees are classified as Applicable Large Employers under the ACA and face specific coverage requirements, reporting obligations, and potential penalties. Understanding exactly where your headcount falls — and what the law requires — is the foundation of ACA compliance.
ACA Compliance
What You Need to Know About Large Employer Requirements
ALE Threshold Calculation
The 50-employee threshold is calculated using full-time equivalents — part-time employee hours are converted to FTEs and added to the full-time count. Seasonal workers have special rules. Businesses near the threshold need to track FTE counts carefully throughout the year.
Minimum Essential Coverage Requirement
ALEs must offer minimum essential coverage to at least 95% of full-time employees (and their dependents). The coverage must be affordable — meaning employee premium contributions don't exceed a threshold percentage of household income — and must meet minimum value requirements.
Employer Shared Responsibility Penalties
Failure to offer required coverage — or offering coverage that doesn't meet affordability or minimum value standards — can result in employer shared responsibility payments triggered when employees obtain subsidized coverage through a marketplace. The penalties are material and calculated per employee.