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With the recent news that the definition of small group will not be expanded to include groups with 51 to 100 employees next year, meaning that mid-sized employers will not be subject to the modified adjusted community rating rules, we thought it might be time for a quick refresher about the definition of “applicable large employer” for purposes of the employer mandate.

It’s easy to get confused about this since different government agencies set different cutoff points for small group and large group.

Definition of small group for the market rules (which govern the benefits that must be covered in your plan and the way insurance companies set the plan premiums): 2 to 50 Total Employees

Definition of Applicable Large Employer (ALE) for the employer mandate (groups which are required to provide health insurance to their employees or pay a penalty): 50 or more Full-Time Equivalent (FTE) Employees

So what’s a Full-Time Equivalent? Basically, what you do is count each full-time employee (employees who work, on average, 30 hours per week or 130 hours per month) as 1 employee. Then you count the part-timers as fractions of a full-time employee. For instance, an employee who works 15 hours per week would be half of an employee. Add your full-timers and your full-time equivalents together, and if you have 50 or more, you’re an applicable large employer.

It’s worth noting, though, that ALE status is not determined on a month-by-month basis. Instead, it’s based on your average number of employees the preceding calendar year. So for 2016, ALE status will be based on the number of employees your company averaged during 2015.

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