I. What provisions of the Affordable Care Act apply to “applicable large employers” (ALE)?
1. The employer shared responsibility provisions which require ACA reporting (1095 Forms to employees and IRS reporting); and
2. The employer information reporting provisions for offers of minimum essential coverage or make a “penalty” payment if MEC is not offered to the IRS.

II. When does an employer know if they are an ALE?
1. Determined each calendar year;
2. Depends on average size of workforce during the previous calendar year.
3. 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, and is therefore subject to the employer shared responsibility provisions and the employer information reporting provisions.
4. An employer adds its total number of full-time employees for each month of the prior calendar year to the total number of full-time equivalent employees for each calendar month of the prior calendar year and divides that total number by 12. It it’s at least 50, the ALE status applies for the current year.

III. Determination of FT and FTE under ACA Regs
1. 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.
2. 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.
3. An employer determines its number of full-time-equivalent employees for a month as follows:
A. The number of hours of service of all non-full-time employees for the month but do not include more than 120 hours of service per employee, and
B. Divide the total by 120.
C. Add to the number of FT employees to see if you have 50.

IV. What Must an ALE Offer for Its FT Employees?
1. Minimum Essential Coverage and Affordable Coverage
–No requirement that PT employees get benefits
–Special rules for seasonal employees
–Use Safe Harbor methods to show MEC: Federal Poverty Line, Rate of Pay or W-2 Pay for Affordability

V. Special Estimator/Calculator to determine FT/FTEs and MEC:
1. Employer Shared Responsibility Provision Estimator helps employers understand how the provision works and learn how the provision may apply to them.

VI. 2024 play-or-pay FPL (federal poverty line) affordability safe harbor.
1. The Department of Health and Human Services (HHS) issued updated FPL figures effective Jan. 11, 2024, that will apply for 2025 calendar-year plans and non-calendar-year plans beginning in 2024. Employers with calendar-year plans can’t rely on those higher FPLs for 2024 affordability testing. Instead, 2024 calendar-year plan sponsors must use the 2023 FPL amounts. As a result, the 2024 FPL affordability safe-harbor monthly employee contribution limits for the lowest-cost, self-only MEC with minimum value are as follows:
A. Non-calendar-year plans beginning in 2024: $105.29, calculated as (8.39% x $15,060 FPL for 2024) ÷ 12, rounded to the nearest penny (see discussion below for a special rule). This will mark the first time that the FPL safe-harbor dollar amount has decreased for no calendar-year plans (down from $110.81 in 2023). As a result, employers that use the exact safe harbor dollar amount will have a smaller employee contribution for the lowest-cost, self-only option for the non-calendar-plan year that beings in 2024 than for the one that began in 2023.
2024 calendar-year plans: $101.94, calculated as (8.39% x $14,580 FPL for 2023) ÷ 12, rounded to the nearest penny. This will mark the second time in three years that the FPL safe-harbor dollar amount has decreased for calendar-year plans (down from $103.28 in 2023).
Special rule for noncalendar-year plans. Noncalendar-year plans may use the FPL in effect within six months before the first day of the plan year. For the 2024 plan year, noncalendar-year plans benefit from using the higher 2024 FPL amounts.

VII. Rate of Pay Safe Harbor
1. Based on an employee’s hourly rate or monthly salary rate. Best practices suggest performing the safe harbor calculation for each full-time employee monthly.
2. To calculate ACA affordability for the 2024 tax year using the Rate of Pay Safe Harbor and hourly workers’ earnings, take the employee’s lowest hourly rate as of the first day of the coverage period. Next, multiply it by 130, the minimum total of hours an employee must work on average to be ACA full-time.
3. Take that product and multiply it by the 2024 affordability percentage of 8.39%. This will identify the maximum monthly contribution that the employee can pay to satisfy 2024 ACA affordability.
Example: For example, ($20/hr x 130 hours) x 8.39% = maximum monthly contribution of $218.14. In this particular situation, to claim the Rate of Pay Safe Harbor using hourly wages, the monthly contribution cannot exceed $218.14.
For a salaried employee, use the monthly salary as of the first date of the coverage period and multiply it by the appropriate affordability percentage for the year.
Here’s an example for 2024. Multiply the $2,000 monthly salary by the 8.39% affordability threshold for 2024. The result of $167.80 is the maximum monthly premium to meet the Rate of Pay Safe Harbor.

VIII W-2 Safe Harbor
1. The W-2 Safe Harbor is a method for proving ACA affordability that involves using an employee’s W-2 Box 1, gross income. To calculate ACA affordability using the W-2 Safe Harbor, use the following formula:
2. W-2 Box 1 Wages multiplied by 8.39% with an adjustment for partial-year coverage.
Here’s an example: Jonny Oswald earns an annual salary of $50,000 as a manager at Parker’s Pizza. Jonny worked at Parker’s Pizza for 9 out of the 12 months throughout the 2024 tax year. He received an offer of coverage on his first day of employment.
So, here’s the calculation: $50,000 x 8.39% = $4,195.
Next, multiply $4,195 by the product of the number of months of coverage offered (9) by the total number of months in the year for partial coverage (9/12): $4,195 x (9/12) = $3,146.25.
$3,146.25 is the maximum annual amount that Jonny’s employer can make him pay for self-only coverage. To determine the monthly amount, divide the total by the number of months Johnny received coverage (9). This will get you $349.58 per month: $3,146.25 / 9 = $349.58.

IX. ACA Reporting Requirements
Section 6056 requires the ALEs to report the health coverage information (for each month) of their employees by sending Form 1095-C and the IRS transmittal Form 1094-C. They must distribute a copy of these forms to the respective employees and submit proof to the IRS by the specified deadlines.

X. FMLA Coverage
1. required for employers with 50 or more employees but
Calculation for 50 employees is different than ALE determinations.