Applicable Large Employers: ALE Requirements in 2018

When the Pay or Play penalty was first introduced, many of our employers scrambled to determine if they were considered at the time to be an Applicable Large Employer (ALE). Some of our ALEs were surprised to find out that they now were indeed obligated to offer insurance or they would have to pay a penalty. Most of our ALE clients who offered insurance toyed with not offering coverage and just paying the penalty but most of those decided to continue offering coverage.

These ALEs just had to be mindful of the affordability requirements. We helped them determine if their contribution schedule and plan offerings met the requirement. The roll out of the 6056 and 6055 requirements came along and we walked our clients through the vendor filing options. Was it easy? No. Was it painful? Yes.

After the dust settled, many took a breath of relief and eased into their new lives post-ACA.

A few years later, many groups are pretty comfortable and don’t pay much attention to their group size. Whether their size increased or decreased, most haven’t kept track of how that may affect their Applicable Large Employer determination.

Maybe there’s something in the water, but suddenly I have several borderline groups that are crossing the ALE threshold in both directions.

Many asked the question right as we are facing a filing deadline.

How do I know if I am an ALE for 2018?

To determine if an employer is an ALE for 2018 they determine if they had on lease 50 full time employees, including full-time equivalent employees (FTEs) during the preceding calendar year. Fortunately, carriers in Oregon use the same determination to figure out how to rate the group and which products the group is eligible for.

If they are determined to be an ALE in 2018, they do have time to start this process for filing this year (and it is always a good idea to start as soon as possible). However, this filling may expose the possibility of penalties for not offering coverage for those 30+ employees last year if that was indeed the case.

Penalties assessed for 2018 will follow the calculation below:

Under Section 4980H(a), the monthly penalty assessed on ALEs that do not offer substantial coverage to all full-time employees (and their dependents) is equal to the ALE’s number of full-time employees (minus 30) x 1/12 of $2,320, for any applicable month. This is predicated on the employee receiving a subsidy from the exchange.

If an employer had a significant change (on average) in 2018, now is the time to know about it. This is definitely something to plan for if changes for employee count are on the horizon for 2019 as well.

For more assistance with ALE determination, understanding penalties or planning for 2019, the Heather Toller and the rest of the Aldrich Benefits team are ready to help.