Are you a large employer that has special reporting requirements? Don’t know?
The ALE Calculator will determine it for you and it’s free of charge! The Affordable Care Act (ACA) requires “applicable large employers” (ALE’s) to offer health coverage to at least 95% of full-time employees and their children (as defined by the ACA) or potentially pay a tax penalty.
In addition, the ACA reporting requirement under Code Section 6056 requires ALE’s to submit annual reports to the IRS and written statements to employees that include data about medical plans offered, the cost of coverage and enrollment.
The employer shared responsibility provisions; and the employer information reporting requirements for offers of minimum essential coverage. Whether an employer is an ALE is determined each calendar year, and generally depends on the average size of an employer’s workforce during the prior year.
If an employer has fewer than 50 full-time employees, including full-time equivalent employees, on average during the prior year, the employer is not an ALE for the current calendar year. Therefore, the employer is not subject to the employer shared responsibility provisions or the employer information reporting requirements for the current year. Employers who are not ALE’s may be eligible for the Small Business Health Care Tax Credit and can find more information about how the Affordable Care Act affects them on the ACA Tax Provisions for Small Employers page.
- If an employer has at least 50 full-time employees, including full-time equivalent employees, on average during the prior year, the employer is an ALE for the current calendar year. It is therefore subject to the employer shared responsibility provisions and the employer information reporting requirements.
Full-time Employees and Full-Time Equivalent Employees
A full-time employee for any calendar month is an employee who has on average at least 30 hours of service per week during the calendar month or at least 130 hours of service during the calendar month.
A full-time equivalent employee is a combination of employees, each of whom individually is not a full-time employee, but who, in combination, are equivalent to a full-time employee.
An ALE need not offer minimum essential coverage to its part-time employees to avoid an employer shared responsibility payment. A part-time employee’s receipt of the premium tax credit for purchasing coverage through the Marketplace cannot trigger an employer shared responsibility payment.
- ALEs also must furnish to employees a statement that includes the same information provided to the IRS. Employees may use this information to determine whether they may claim the premium tax credit on their individual income tax returns for each month of the calendar year.
- Some ALEs may be eligible to use an alternative reporting method designed to simplify and reduce reporting costs. For more information about the alternative reporting methods, see section 301.6056-1(j) of the regulations.
- The penalty for failure to file an information return generally is $100 for each return for which such failure occurs. The total penalty imposed for all failures during a calendar year cannot exceed $1,500,000.
The penalty for failure to provide a correct payee statement is $100 for each statement concerning which such failure occurs, with the total penalty for a calendar year not to exceed $1,500,000.
Special rules apply that increase the per-statement and total penalties if intentional disregard of the requirement to furnish a payee statement.