HR Glossary for HR Professionals

Glossary of the most common HR terms and acronyms to assist professionals navigating the ever-growing and ever-changing world of HR terminology.

Applicable Large Employer (ALE)

What is an Applicable Large Employer (ALE)?

According to the Affordable Care Act (ACA), an applicable large employer (ALE) is an organization that employs at least 50 full-time employees, including full-time equivalent (FTE) employees, on average during the prior calendar year. Seasonal workers do not count toward this total.

ALEs are subject to the employer shared responsibility provisions and special reporting provisions like Form 1095-C. Employers who do not meet these requirements are not subject to the previously mentioned provisions.

How Does an Organization Determine if it is an Applicable Large Employer (ALE)?

Use the following steps to determine if your organization is an applicable large employer (ALE):

1. Calculate the number of full-time employees (FTE) per month.

Add all the FTEs* for each month together to get a subtotal.

* The IRS defines an FTE (Full-Time Equivalent) as someone who works 30 hours per week, or 130 hours per calendar month.

2. Calculate the number of hours worked by non-FTEs per month.

Divide this number by 120 to determine the number of full-time equivalents. Add all months together to get a subtotal.

3. Add the two subtotals together.

4. Divide the total by 12.

5. If the total is less than 50, you are NOT an ALE. If the total is greater than 50, you ARE an ALE.

For more information on determining ALE status, go to

How Does ALE Status Impact Minimum Essential Coverage (MEC)?

One of the key provisions in the ACA states that all applicable large employers (ALE) must offer a health insurance plan that qualifies as minimum essential coverage (MEC).

Employers are subject to penalties if their healthcare plans do not meet MEC requirements as stipulated by the ACA.

An ALE will owe the first type of employer shared responsibility payment—or, in other words, penalty—if it doesn’t provide MEC to at least 95% of its full-time staff, and at least one full-time employee qualifies for the premium tax credit (PTC) for purchasing health coverage through the government marketplace.

On the other hand, even if an ALE offers MEC to at least 95% of its staff, it could owe the second type of employer shared responsibility payment for every full-time employee who receives the PTC for purchasing coverage through the government marketplace.

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