KB13-015

An applicable large employer with respect to a calendar year is defined in IRC Section 4980H(c)(2) as an employer that employed an average of at least 50 combined full-time employees and full-time equivalents on business days during the preceding calendar year.

The determination of whether an employer not in existence the preceding calendar year is an applicable large employer is based on the average number of employees that the company was reasonably expected to employ on business days in the current calendar year.

If an employer was in existence for only part of the preceding calendar year, it is based on the average number of full-time employees and equivalents during the period of existence. The ID Cloud Solution gives you a report with the accurate figures for your ALE count.

The following is copied directly from the 2021 Instructions for 1094-C and 1095-C:

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 full-time equivalent employees) on business days during the preceding calendar year. For purposes of determining an employer’s average number of employees, disregard an employee for any month in which the employee has coverage under a plan described in section 4980H(c)(2)(F) (generally, TRICARE or Veterans Administration coverage). 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. For information on a special rule for certain employers with seasonal workers, see the final regulations under section 4980H and FAQs on IRS.gov.

Full-time equivalent employees. A combination of employees, each of whom individually is not treated as a full-time employee because he or she is not employed on average at least 30 hours of service per week with an employer, but who, in combination, are counted as the equivalent of a full-time employee solely for purposes of determining whether the employer is an ALE. For rules on how to determine full-time equivalent employees, see Regulations section 54.4980H-2(c).

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Last Review: 8/5/2022 – Revision: 2.0

Applies To: ACA Reporting Requirements (ACA Law)

Categories:  Year End – Prerequisites 1094-C

Keywords:  Applicable, ALE