Employer’s offer of coverage is considered affordable under the ACA if the employee’s share of the
premium for the lowest priced plan available that would cover the employee only — not the
employee’s family — is 9.56% (CY2017) or less of their household income. People offered job-based
coverage that’s affordable and provides minimum value may not be eligible for a premium tax credit if
they buy a plan through the Health Insurance Marketplace.
Affordable percentage is adjusted annually.
Aggregated ALE Group.
An Aggregated ALE Group refers to a group of ALE Members treated as a single employer under
section 414(b), 414(c), 414(m), or 414(o). An ALE Member is a member of an Aggregated ALE Group for
a month if it is treated as a single employer with the other members of the group on any day of the
calendar month. If an ALE is made up of only one person or entity, that one ALE Member is not a part of
an Aggregated ALE Group. Government entities and churches or conventions or associations of
churches may apply a reasonable, good faith interpretation of the aggregation rules under section 414
in determining their status as an ALE or member of an Aggregated ALE Group.
Applicable Large Employer (ALE).
An ALE is, for a particular calendar year, any single employer, or group of employers treated as an
Aggregated ALE Group, that employed an average of at least 50 full-time employees (including fulltime equivalent employees) on business days during the preceding calendar year.
A new employer (that is, an employer that was not in existence on any business day in the prior
calendar year) is an ALE for the current calendar year if it reasonably expects to employ, and actually
does employ, an average of at least 50 full-time employees (including full-time equivalent employees)
on business days during the current calendar year.
Full Time Employee.
A full-time employee is an employee who, for a calendar month, is employed an average of at least 30
hours of service per week with the employer. For this purpose, 130 service hours in a calendar month is
treated as the monthly equivalent of at least 30 hours per week. An employer must complete
information for all twelve months of the calendar year for any of its employees who were full-time
employees for one or more months of the calendar year.
If the employer uses the monthly measurement method for determining employee eligibility, then any
variable hour employee that works, on average, 130 hours per month in a previous testing period
would be considered full time during the corresponding stability.
Hour of Service.
An hour of service is:
- Each hour for which an employee is paid, or entitled to payment, for the performance of duties
for the employer, and
- Each hour for which an employee is paid, or entitled to payment by the employer for a period
of time during which no duties are performed due to vacation, holiday, illness, incapacity
(including disability), layoff, jury duty, military duty or leave of absence.
Exclusion from the definition of hour of service is provided for services performed in certain capacities,
which are not counted as hours of service for purposes of the employer shared responsibility
- Volunteer employees – Hours of bona fide volunteer service for a government entity or taxexempt organization do not count as hours of service.
- Students performing work-study – Hours of service do not include hours performed by students as
part of the federal work study program or a substantially similar program of a state or political
- Members of religious orders – a religious order is permitted to not count as an hour of service
work performed by an individual who is subject to a vow of poverty. For this exclusion to apply,
the employee must be a member of the religious order and must be performing tasks that are
usually required of active members of that order.
• Compensation that is not U.S. source income – Hours of service do not include hours for which an
employee receives compensation that is taxed as income from sources outside the United States
(generally meaning certain work overseas).
Look-Back Measurement Method.
Employer determines each employee’s full-time status by looking back at a defined period of not less
than 3 but not more than 12 consecutive calendar months, as chosen by the employer (the
measurement period), to determine whether during the measurement period the employee averaged
at least 30 hours of service per week. If the employee were determined to be a full-time employee
during the measurement period, then the employee would be treated as a full-time employee during a
subsequent “stability period,” regardless of the employee’s number of hours of service during the
stability period, so long as he or she remained an employee. For an employee determined to be a fulltime employee during the measurement period, the stability period would be a period of at least six
consecutive calendar months that follows the measurement period and is no shorter in duration than
the measurement period. If the employee were determined not to be a full-time employee during the
measurement period, the employer would be permitted to treat the employee as not a full-time
employee during a stability period.
Minimum essential coverage (MEC).
Minimum essential coverage includes:
- Coverage under health plans offered in the individual market (including qualified health plans).
- Most coverage through government-sponsored programs (including Medicaid coverage,
Medicare parts A or C, the Children’s Health Insurance Program (CHIP), certain benefits for
veterans and their families, TRICARE, and health coverage for Peace Corps volunteers).
- Most types of employer-sponsored coverage.
- Grandfathered health plans.
- Other health coverage designated by the Department of Health and Human Services as
minimum essential coverage.
Minimum essential coverage does not include coverage consisting solely of excepted benefits. Excepted
benefits include stand-alone vision and dental plans, workers’ compensation coverage, and coverage
limited to a specified disease or illness.
Minimum value (MV).
A plan provides minimum value if the plan pays at least 60 percent of the costs of benefits for a
standard population and provides substantial coverage of inpatient hospitalization services and
physician services. This means that enrollees pay—via deductibles, coinsurance, copayments and other
out-of-pocket amounts— on average no more than 40% of the total allowed cost of benefits. Minimum
Value does not take into account the amount paid for premium. An example of an employer plan that
might not meet the 60% requirement is a “mini-med” or catastrophic coverage only plan. An offer of
coverage under a plan that fails to provide substantial coverage of inpatient hospitalization and
physician services should be reported on Form 1095-C as not providing minimum value.
Variable Hour Employee.
An employee is a variable hour employee if, based on the facts and circumstances at the date the
employee begins providing services to the employer (the start date), it cannot be determined that the
employee is reasonably expected to work on average at least 30 hours per week.
All new variable hour employees will be testing in their unique initial measurement period. Ongoing
variable hour employees will be tested in standard measurement periods in order to determine
eligibility for access to employer sponsored health coverage. Variable hour employees that test eligible
during a previous testing period will be considered to be full-time employees during the corresponding
Offer of coverage.
An employer makes an offer of coverage to an employee if it provides the employee an effective
opportunity to enroll in the health coverage (or to decline that coverage) at least once for each plan
year. An employer makes an offer of health coverage to an employee for the plan year if it continues
the employee’s election of coverage from a prior year but provides the employee an effective
opportunity to opt out of the health coverage. An employer offers health coverage for a month only if
it offers health coverage that would provide coverage for every day of that calendar month.