What is an Applicable Large Employer?

As a health insurance broker, your groups may still be uncertain about where they fall on certain ACA issues—including whether they are considered to be an applicable large employer or not. Basically, if their business employed an average of 50 or more full-time employees during the previous calendar year (2014), it is considered an applicable large employer for the current year (2015).

What’s important for you—and your clients—to note is that a business is defined as an applicable large employer on a calendar-year basis. For example, the company could be considered as such in 2015, but not in 2014. Why? Because if the company employed 50 or more full-time employees in 2014, it would be considered that for the current calendar year.

Other considerations:

• A business isn’t one if it had less than 50 full-time employees on average during the previous calendar year.
• It also isn’t one if it employed more than 50 full-time employees no more than 120 days during the previous calendar year due to a seasonal workforce.

Yeah…it’s confusing.

So how do you calculate full-time/part-time/seasonal employees to make these determinations? Here’s an at-a-glance:

• The business must include all full-time employees plus the full-time equivalent of part-time employees. Employees are considered full-time if they work on average at least 30 hours per week in a given month.
• Also factor in part-time employees. To calculate the full-time equivalent of part-time employees, add the number of hours worked by part-time employees each month and divide the total by 120.
• The sum of full-time employees and full-time equivalent of part-time employees is what’s used to determine whether the business is an applicable large employer. If the number is 50 or over? The company is an applicable large employer.

And…they’ll have to provide health insurance. As their valued broker, you can work with them on options. A good one is private exchanges. Do your research and go to them with the options you believe will best fit their needs. In that way, you ensure your value as an expert they can turn to for their health benefits decision-making.