ALE
Under the Affordable Care Act, the employer mandate’s definition
of an Applicable Large Employer (ALE) is the difference between an employer
that is regulated by the employer mandate and an employer that is not. If the
definitions implemented by the Affordable Care Act are not correctly
understood, an employer may mistakenly believe the employer mandate regulations
do not apply to its business. Conversely, an employer may believe the
regulations do apply when they do not. This
is important because if your business is not an ALE, then you are not governed
by the employer mandate regulations. Let us help you figure it all out.
The employer mandate’s ALE definition is a single employer that employs 50 or more full-time employees (or their equivalent).
To further define the ALE, apply the following basic steps:
1. Define the employer.
1. Define the employer.
2. Define the full-time employee or equivalent
(FTE).
3. Calculate the number of FTEs.
These three steps will lead to the
correct definition of what is defined as an ALE by the employer mandate of the
Affordable Care Act.
To avoid an overload of complexity,
we are only going to discuss the first two steps of defining the ALE. Just know
that before you are completely defined as an ALE, you have to calculate the
number of FTEs you employ. We will discuss the steps to calculating FTEs in a follow-up
post.
An employer as defined under the
provisions of 4980H of the Internal
Revenue Code, employs on average at least 50 full-time employees (or their
equivalent). Under the same provisions, a full-time employee is defined as (the
following definition does not apply for tax credit purposes) an employee who
provides on average at least 30 hours of service a week. In combination, these two definitions provide
a more elaborate interpretation of the employer mandate’s definition of the ALE.
To further define the ALE, we must also discuss how to calculate FTEs. This is
the final step in deciding if your business is defined as an ALE under the
regulations of the employer mandate. If you have any questions pertaining to
the information presented in this blog, please contact us for further
clarification.
posted by Monty & Ramirez LLP
@
9:13 AM
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