Growing your business means more responsibilities. Navigating the Affordable Care Act (ACA) can be challenging, particularly as you transition to an Applicable Large Employer (ALE) status. To help you navigate this transition smoothly, we’ll explore what becoming an ALE means and how you can stay compliant with ACA rules.
How Is ALE Status Determined?
An employer’s ALE status is determined by the average number of full-time employees (including full-time equivalents) during the previous calendar year. If an employer is part of a control group, ALE status is determined by adding all full-time employees (including full-time equivalents) for each affiliated company in the controlled group. If the control group averages over 50 full-time employees (including full-time equivalents), then all members of the control group are considered an ALE. With a few exceptions, ALE status is determined on January 1 of each year. Please refer to this IRS link which is an excellent resource. https://bit.ly/ALEstatus
What Happens After Becoming an ALE?
Once your business is considered an ALE you need to:
Offer affordable health coverage, that meets minimum actuarial value, to full-time employees, and their dependents.
Track which employees were offered coverage, took coverage or declined coverage.
File Form 1094-C with the IRS and provide Form 1095-C to your employees as part of your ACA reporting obligations.
Is There a Grace Period?
Yes, there is a "limited non-assessment period" (LNP) for new ALEs, where no penalties are assessed for the first three months (January through March). For example, if your business grows to 50 or more full-time employees (including full-time equivalents) in 2024 and becomes an ALE in 2025, you have until April 1, 2025, to comply with the Employer Mandate rules without incurring penalties. This limited non-assessment period only applies if you have not offered insurance in the past.
Next Steps for Employers
As your business grows, it’s important to prepare for the responsibilities that come with ALE status. Start tracking employee coverage and familiarize yourself with ACA reporting requirements. Begin planning for how to offer health coverage and manage the necessary paperwork. Consulting with experts and utilizing resources can help you navigate this transition smoothly. Staying proactive will ensure your company meets its new obligations effectively and avoids potential penalties.
For more information on how Medcom can help with your ACA needs, including reporting, visit our Solutions Page or contact our ACA Sales Specialist, Tom Neal.
