Applicable Large Employer

Businesses that fall under the umbrella of "Applicable Large Employer" (ALE) are those that are required to pay into the employer shared responsibility programs established by the Affordable Care Act (ACA). To be eligible for the Affordable Care Act's employer health insurance premium subsidies, a business must have had 50 or more full-time workers (or equivalents) on average in the previous calendar year. ALEs may be subject to fines for failing to comply with the ACA's requirements, which include providing qualified workers with affordable health insurance. In order to comply with the ACA rules and meet the employer's obligations regarding health coverage for workers, it is critical to understand if a company is an ALE.

Example of ALE (Applicable Large Employer)

A manufacturing firm that employs 60 full-time workers and 20 part-time workers must ascertain if it is an ALE in accordance with the Affordable Care Act. The method the organization uses to establish the number of full-time equivalent (FTE) employees is by adding up all of the hours worked by part-time workers. Taking into account both full- and part-time workers, let's say the computation shows that the firm has 70 full-time equivalents. Here, we may say that the firm is an ALE as it regularly employs 50 or more people full-time. In order to avoid fines for non-compliance, the firm must comply with the ALE requirements of the ACA, which include providing qualified full-time workers with affordable health insurance and reporting pertinent information to the Internal Revenue Service (IRS).