September 30, 2015
Pay or Play Applies to All 'Applicable Large Employers' (ALEs)
In general, an employer that is subject to the employer shared responsibility ("pay or play") provisions of the Affordable Care Act will face penalties if it does not offer affordable minimum essential coverage that provides minimum value to its full-time employees and their dependents.
Determining ALE Status
Whether an employer is considered an "applicable large employer" (ALE) that is subject to pay or play depends on the size of its workforce. Employers will determine each year—based on their average employee count for the 12 months of the prior year—whether they are an ALE for the current year. (Note: Solely for 2015, an employer may measure over any consecutive 6-month period during 2014, rather than measuring all 12 months of 2014.)
All types of employers can be ALEs, regardless of the nature of the organization, including tax-exempt organizations and government entities.
Applicable Workforce Size
Employers with 50 or more full-time employees in the preceding year, including full-time equivalent employees (FTEs), are ALEs for the current year (unless the seasonal worker exception applies). However, for 2015, employers with 50 to 99 full-time employees (including FTEs) will not be subject to penalties if they meet certain eligibility criteria listed in IRS Q&A #34.
Employers with fewer than 50 full-time employees (including FTEs) in the preceding year are not ALEs for the current year. Click here to learn more about identifying full-time employees.
For more information about how to determine whether your organization is an applicable large employer, including special rules for seasonal workers, new employers, and related employers, visit the IRS webpage for Determining if an Employer is an Applicable Large Employer.
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