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ACA Regulatory Classification: How Large Is Your Organization?

shutterstock_251707783 sm - CopyRegulatory standards are often based upon the size of an organization. In the case of PPACA, there are two primary groups with significantly distinct compliance rules and regulations – large employers, and smaller employers. Large employers as per the Affordable Care Act are termed ALEs, or Applicable Large Employers, and can face severe fines and penalties should they fail to comply with the additional regulations set forth. Does your organization qualify as an Applicable Large Employer? If so, are you prepared to meet your obligations under the employer shared responsibility requirements?

Most U.S. employers are not large enough to meet the definition of an ALE. To be characterized as such, an employer must have had at least 50 full-time employees (including full-time equivalent employees) during the preceding calendar year. ACA regulatory standards for ALEs dictate that such employers must offer affordable minimum essential health care coverage (MEC) to full-time employees and their dependents. This doesn’t apply to full-time equivalent employees, even though they contribute to the formula for business size classification. Failing to comply may result in assessment of an employer shared responsibility fee. For the purposes of this requirement, dependents are defined as an employee’s child (biological, adopted or placed for adoption) who has not reached the age of 26. Under this law, spouses, stepchildren or foster children are not considered dependents.

The employer shared responsibility requirements are also referred to as the “employer mandate” or “pay or play provisions” with regard to employer healthcare requirements. Information reporting responsibilities are also required to be met by the same group of employers, ALEs. ALEs must report certain information about the minimum essential coverage they are offering their employees. These requirements include informing employees of the health coverage; certain forms must be completed and sent to employees as well as the IRS. And employer that sponsors self-insured health insurance coverage – whether or not they are an ALE – must also meet these new reporting requirements.

For more information about benefits compliance, contact us.

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