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How to Determine Applicable Large Employer Status Under the Affordable Care Act

Author: Brian G. Muse, LeClairRyan

The employer shared responsibility requirements only apply to "applicable large employers" (ALEs). Under the Affordable Care Act (ACA), an employer, regardless of for-profit or not-for-profit status, and regardless of whether it is a public employer, qualifies as an ALE for a calendar year if it employs, on average, at least 50 full-time employees, including full-time equivalent employees (FTEs), on business days during the preceding calendar year. The determination as to whether an employer is an ALE is based on the number of employees employed in the prior year, and is then applied to the following year.

If an employer is a member of a controlled group for tax purposes, it is automatically considered an ALE, regardless of how many individuals it employs.

The following steps can help an employer determine if it is an ALE and subject to the employer shared responsibility requirements.