How is ALE status determined for ACA purposes?

ALE status is determined by counting the number of full-time employees and full-time equivalents (FTEs) during the prior calendar year. If an employer averages 50 or more full-time or FTE employees, it is classified as an ALE and subject to ACA employer mandate requirements.

What are the key ACA compliance responsibilities for ALEs?

ALEs must track employee hours worked, determine eligibility for health coverage based on ACA rules, offer affordable minimum value coverage to full-time employees, and file accurate ACA forms (1094-C and 1095-C) with the IRS annually.

Why does tracking variable-hour employees matter for ACA compliance?

Variable-hour employees’ hours fluctuate, so tracking actual hours worked during measurement periods is essential to determine whether they qualify as full-time under ACA rules and therefore must be offered coverage. Proper tracking protects employers from potential penalties.

What tools does ACA-Track provide to ease ACA compliance for ALEs?

ACA-Track offers data integration from payroll and HRIS, automated hour tracking, customizable eligibility alerts, error checking, and IRS-compliant form generation and e-filing, supported by dedicated client success advisors for personalized assistance.

What are the consequences of failing to comply with ACA as an ALE?

Non-compliance can result in costly IRS penalties, including shared responsibility payments per full-time employee and fines for late or inaccurate reporting. These penalties can significantly impact an employer’s finances and reputation.

General ACA Compliance for Applicable Large Employers (ALEs): A Comprehensive Guide with ACA-Track

The Affordable Care Act (ACA) brought significant changes to how employers manage employee health coverage and reporting. For Applicable Large Employers (ALEs), navigating the complexities of ACA compliance can be daunting. From tracking employee hours to filing accurate IRS forms, the requirements are detailed and strict. Fortunately, solutions like ACA-Track simplify these processes with technology and expertise, ensuring your company remains compliant.

In this post, we’ll explore general ACA compliance obligations for ALEs, highlight key compliance challenges, and show how ACA-Track can help you confidently meet every requirement.

What Does ACA Mean for Your Business?

Under Section 4980H of the Internal Revenue Code, ALEs—generally employers with 50 or more full-time or full-time equivalent employees—must offer affordable health insurance that provides minimum value to their full-time employees and dependents. Failure to do so can result in significant penalties.

An ALE is determined by reviewing the workforce size in the previous calendar year. For example, if your company averaged 50 or more full-time employees or full-time equivalents (FTEs) last year, you’re an ALE this year.

Defining Full-Time Employee Status

A full-time employee is one who works at least 30 hours per week or 130 hours per month.
To calculate full-time equivalents, hours worked by part-time employees (capped at 120 hours per employee per month) are aggregated and divided by 120.

Why Tracking Part-Time and Variable-Hour Employees Matters

Employers must track actual hours worked for part-time and variable-hour employees during measurement periods (usually 3-12 months). This tracking determines if employees meet the full-time threshold and are eligible for coverage.

Failing to track these hours risks penalties if employees claim marketplace subsidies because your company did not offer coverage when required. Consistent documentation protects your company and ensures accurate compliance.

The Compliance and Reporting Obligations for ALEs

ALEs must file detailed ACA reports with the IRS annually, including:

Form 1095-C: Provided to each full-time employee, detailing the health coverage offered.
Form 1094-C: A transmittal form summarizing the employer’s ACA compliance and submitted to the IRS.

These forms help the IRS assess if the ALE met its coverage obligations or owes shared responsibility payments.

What Data is Needed for ACA Compliance?

Comprehensive ACA compliance requires collecting and integrating data from multiple departments:

Payroll: Employee hours, earnings, and pay periods.
Human Resources: Employee status, hire dates, terminations, and benefits eligibility.
Benefits Administration: Insurance coverage offers, waivers, and enrollment data.
Finance: Employer identification, payment tracking, and IRS filings.

This data must be accurate, timely, and formatted according to IRS schema for electronic submission, especially for employers with 250+ employees who must file electronically.

Key Challenges for ALEs in ACA Compliance

Data Integration: ACA data comes from different systems—payroll, HRIS, benefits platforms—making aggregation difficult.
Tracking Variable Hours: Monitoring actual hours worked for part-time and variable employees over long measurement periods can be complex.
Reporting Accuracy: Filing correct, error-free forms (1094-C and 1095-C) is essential to avoid IRS penalties.
Penalties for Non-Compliance: The IRS can assess significant fines, including per-employee penalties and “Employer Shared Responsibility” payments.
Data Security: Maintaining confidentiality and security of sensitive employee information is mandatory.

How ACA-Track Makes ACA Compliance Simple and Secure

ACA-Track is a proven ACA compliance solution designed specifically for ALEs, simplifying every step from data collection to IRS reporting.

Key Features of ACA-Track

Comprehensive Employee Hours Tracking
ACA-Track collects actual hours worked from all employee types, including variable-hour, full-time, part-time, and substitutes. Data can be imported from multiple sources: timekeeping systems, manual timesheets, payroll systems, or even employee mobile devices.
Advanced Eligibility Monitoring
The platform monitors eligibility thresholds, sending advance alerts when employees near full-time status. It tracks employee events such as waivers and leaves to ensure accurate coverage offers.
User-Friendly Reporting Tools
ACA-Track creates IRS-ready 1094-C and 1095-C forms and allows electronic filing with the IRS’s AIR system. Its customizable dashboard and snapshot summaries give users a clear, comprehensive view of ACA compliance status.
Flexible Configuration
ACA-Track allows custom measurement, administrative, and stability periods tailored to your company’s unique policies. It supports thresholds for days/weeks/months worked, waiver codes, affordability percentages, and other ACA rules.
Error Detection and Data Analysis
The software provides color-coded warnings and detailed filters for identifying errors or unusual data patterns, improving reporting accuracy.
Security and Compliance
Hosted on a SAS 70 and SSAE 16-certified cloud data center, ACA-Track is SOC 2 type 2 compliant. Personal data is encrypted, transmitted securely via HTTPS, and no HIPAA medical data is stored.
Dedicated Support
ACA-Track assigns a Client Success Advisor to each client, providing hands-on support throughout the compliance process—from data collection to IRS filing and error corrections.

Avoid Penalties with ACA-Track

Penalties for late or inaccurate ACA filings can be steep:

$50 to $270 per return if filed late, escalating for filings after August 1.
Employer Shared Responsibility Payments up to $2,000 per full-time employee if coverage is not offered.

ACA-Track helps you avoid these by ensuring timely, accurate filings and offering audit-ready records at your fingertips.

Summary: Why ALEs Should Partner with ACA-Track

Managing ACA compliance is a multifaceted challenge for ALEs, requiring precise data collection, monitoring, and reporting. Partnering with ACA-Track provides:

Confidence with a proven ACA compliance solution.
Seamless integration with your existing payroll and HR systems.
Automated, accurate IRS reporting and error resolution.
Comprehensive tracking for every employee type.
Expert guidance and dedicated client support.

Don’t let ACA compliance overwhelm your organization. With ACA-Track, you gain a trusted partner committed to simplifying and securing your ACA obligations.

Ready to make ACA compliance easy and stress-free? Visit ACA-Track today to learn more about their customized plans and pricing tailored to your business needs.

General ACA Compliance for ALEs