Frequently Asked Questions

An employer is generally an Applicable Large Employer (ALE) when it averaged at least 50 full-time employees, including full-time equivalents, during the prior calendar year. Related-employer and seasonal-worker rules can affect the calculation. ALE status determines whether the ACA employer shared-responsibility rules apply; it is not the same as Texas small-group insurance eligibility. Source: IRS, Determining if an employer is an applicable large employer.

An Applicable Large Employer may owe an employer shared-responsibility payment if it fails to offer the required coverage, or if an offer is unaffordable or does not provide minimum value, and a full-time employee receives a Marketplace premium tax credit. Different payment rules apply to the different failures. Liability depends on the coverage month, workforce and applicable year; confirm the calculation with legal or tax counsel. Source: IRS, Employer shared responsibility provisions.

Non-grandfathered individual and fully insured small-group policies generally must cover the ten essential-health-benefit categories, subject to applicable transitional relief. Large-group and self-funded plans do not have the same blanket requirement to cover all ten categories, although other ACA protections can apply. Confirm the market, funding arrangement and plan status before judging compliance. Source: Texas Department of Insurance, Small employer health insurance guide.

Start with the employer’s ALE calculation, the plan’s market and funding arrangement, and any grandfathered or transitional status. Then review applicable benefit protections, affordability, minimum value, eligibility, notices and reporting rather than treating essential health benefits or actuarial value as a universal compliance test. Primary Care Insurance Solutions (PCIS) can help organize the review; legal or tax counsel should confirm specific obligations. Sources: IRS, Employer shared responsibility provisions; Texas Department of Insurance, Small employer health insurance guide.

An employer averaging fewer than 50 full-time employees, including full-time equivalents, during the prior calendar year generally is not an ALE, subject to related-employer and other applicable counting rules. That does not remove all plan obligations. ACA small-group rating rules generally apply to non-grandfathered fully insured small-group policies, not every arrangement offered by an employer below 50. Self-funded and level-funded arrangements have different rules. Sources: IRS, Determining if an employer is an applicable large employer; Texas Department of Insurance, Small employer health insurance guide.