How to Calculate Your ALE Status Under the ACA

Determine whether your organization is an Applicable Large Employer (ALE) under the Affordable Care Act by following this guide.

Definition of an ALE

An Applicable Large Employer (ALE) is any employer that, in the prior calendar year, averaged 50 or more full-time employees (FT) plus full-time equivalents (FTE).

• Full-Time Employees (FT): Anyone working ≥ 30 hours per week (or ≥ 130 hours in a month).
• Full-Time Equivalents (FTE): Convert part-time hours into FT equivalents by:
  • Capping each non-FT employee’s monthly hours at 120.
  • Summing all capped hours for the month and dividing by 120.

If your yearly average of (FT + FTE) is 50 or more, your company is an ALE for the current calendar year.

Note on Rounding: IRS regs require you to truncate (drop) any decimal. For example, an average of 49.9 counts as 49, not 50.

Why ALE Status Matters

If you are an ALE, you must:

• Offer Coverage (ESR § 4980H): Provide affordable, minimum-value health coverage to at least 95 % of your FT workforce—or pay penalties.
• IRS Reporting: File Forms 1094-C and 1095-C annually, detailing offers of coverage.

Failure to comply can trigger substantial fines under § 4980H.

The ALE Calculation

Below is a step-by-step guide to plug your data into the attached spreadsheet:

1. Enter the FTs: For each month, enter the number of employees who logged ≥ 30 hours per week or 130 hours in a month.
2. Enter the FTEs: For each month add all the monthly hours worked by non-FT employees, capping each employees contribution at 120 hours.
3. After plugging in your data, the spread sheet:
   1. Divides the monthly hours by 120 to get the number of FTEs.
   2. Adds the number of FTs and FTEs over the calendar year and divides by 12.
   3. Round down the sum of FT and FTEs
4. If the final figure is 50 or more, you are an ALE for the current year.
   

Seasonal-Worker Exception

If your combined FT + FTE headcount exceeds 50 for 120 days or fewer in the year and those additional workers are truly “seasonal,” you do not count as an ALE. Be sure to track your “surplus” dates and worker status so you can substantiate the exception if audited.

With this calculator and these step-by-step instructions, you can quickly see whether your organization crosses the ALE threshold—and plan your staffing and benefits strategy accordingly. If you have questions about specific line items in the spreadsheet, feel free to ask!