When calculating full-time headcount to see whether a business is large enough to need to comply with the Affordable Care Act, a company has to start by looking at the service hours of every worker.
But in the tally toward that all-important threshold for an Applicable Large Employer – 50 full-time employees, including equivalents – you can exclude 3 categories of employees from the ALE count:
- Seasonal Employees
We will discuss each of these employee categories and explain the possible benefit in excluding them from the ALE count.
Excluding Veterans from ALE Count
When calculating your ALE count, you may exclude the following:
- Active and retired service members enrolled in a U.S. Department of Defense health plan
- Any employee who as a spouse, survivor or dependent of an active or retired service member is enrolled in a U.S. Department of Defense health plan
To see specific examples of excluding veterans from your ALE count, please reference: ACA Math to Check the Need for Compliance: Excluding Veterans from ALE Count.
Excluding Seasonal Workers
The seasonal worker exclusion is probably the most well-known of the three. When utilizing this exclusion, a company must take the definition of “seasonal” into consideration. According to ACA regulations, a seasonal employee is an employee that has been employed for a period of 120 days or less. Please see: ACA Math to Check the Need for Compliance: Excluding Seasonal Workers from ALE Count for details on how to define a seasonal worker and examples of this exclusion.
Excluding Company Owners
You are permitted to exclude:
- Sole proprietors
- Partners in a partnership
- Shareholders in an S corporation with a 2% or greater share
Excluding these workers is permissible because ACA regulations do not define anyone with such ownership status as a full-time employee.
For specific examples of excluding owners from the ALE count, please reference: ACA Math to Check the Need for Compliance: Excluding Owners from ALE Count.
All three exclusions from the ALE head count, can make a difference for businesses teetering on the 50 FTE threshold. Please be sure to review the aforementioned articles for additional details on these exclusions.