To determine if your organization is an Applicable Large Employer (ALE) under the Affordable Care Act (ACA), you need to calculate the total number of full-time employees (FTEs) and full-time equivalent employees (FTEEs) for the previous calendar year. Here’s how to do it step by step:
Step 1: Count Full-Time Employees
- Definition of Full-Time Employee: An employee who works at least 30 hours per week or 130 hours per month.
- Count the total number of these full-time employees for each month of the prior year.
Step 2: Calculate Full-Time Equivalent Employees (FTEEs)
- For employees who are not full-time, calculate their hours worked per month.
- Add up the total hours worked by these part-time employees in a month.
- Divide the total by 120 (the monthly full-time threshold).
- Example: If part-time employees worked a combined 240 hours in a month, it equals 2 FTEEs (240 ÷ 120 = 2).
Step 3: Combine Full-Time and FTEEs
For each month:
- Add the number of full-time employees and FTEEs.
Step 4: Average Over 12 Months
- Add the monthly totals of full-time employees and FTEEs for all 12 months.
- Divide the annual total by 12 to calculate the yearly average.
Step 5: Determine ALE Status
- If the average is 50 or more full-time employees (including FTEEs), your organization is considered an Applicable Large Employer (ALE) for the current calendar year.
Special Considerations
- Seasonal Worker Exception: If your workforce exceeds 50 full-time employees (including FTEEs) for 120 days or fewer in a year due to seasonal workers, you may not be classified as an ALE.
- Controlled Groups: If your business is part of a controlled or affiliated group (e.g., parent-subsidiary relationships), employees across the group must be aggregated for ALE determination.
Why Does ALE Status Matter?
If you are an ALE:
- You are subject to the employer shared responsibility provisions of the ACA.
- You must file Forms 1094-C and 1095-C with the IRS to report offers of health coverage.
If you need further assistance calculating this or navigating the reporting process, call or e-mail us at any time. Our main office can be reached at support@1099fire.com or (480) 706-6474.