Applicable large employers (ALEs) are required to file Form 1095-C annually on February 28th (on paper) or March 31st (electronically). Form 1095-C reports Employer-Provided Health Insurance Offer and Coverage.
An employer qualifies as an applicable large employer (ALE) for a calendar year if it averages 50 or more full-time and full-time equivalent employees during the prior year. The key here is the 50 or more full-time and full-time equivalent employees. For determination as an ALE, the IRS treats a full-time employee as someone who works at least 30 hours per week or 130 hours per month. A full-time equivalent employee is a combination of employees, each of whom individually lacks the hours to count as full-time, but who in combination are counted as the equivalent of a full-time employee solely for the purpose of determining ALE status. The number of full-time equivalents is determined by adding the number of hours of service of employees who are not full-time employees (but not more than 120 hours per employee) for the month, and then dividing by 120.
The employer mandate under the Affordable Care Act specifies that ALE’s must provide certain minimum health benefit coverage to at least 95% of their full-time employees and dependents (excluding spouses) or they may be subject to a penalty from the IRS.
Individuals who work full-time for applicable large employers will get this form. This excludes the full-time equivalent employees. It is the employer’s responsibility to determine if they qualify as an ALE each year.
This article provides an overview of the ALE reporting requirements. For additional information, please contact our office. Additional information can also be obtained from the IRS website.