The Broker's Role in ALE Qualification
Insurance brokers must ensure their clients maintain compliance with Affordable Care Act (ACA) requirements. Identifying whether a business qualifies as an Applicable Large Employer (ALE) directly affects benefits obligations for full-time, part-time, variable-hour, and seasonal employees.
This guide outlines the steps for accurate ALE determination and highlights how brokers can assist clients in meeting compliance standards while offering appropriate benefits solutions.
The ALE Calculation Process
Step 1: Count Full-Time Employees
Full-time employees work 30+ hours weekly or 130+ hours monthly
Track these employees for each calendar month
Record accurate monthly figures
Client Value: Many businesses miscalculate by failing to track monthly employee counts. Tracking helps them stay below critical thresholds or prepare appropriately if they exceed them.
Step 2: Calculate Full-Time Equivalent (FTE) Employees
Total all hours worked by part-time employees (those working less than 30 hours weekly)
Divide this monthly total by 120 to determine the FTE count
Client Value: Including part-time and variable-hour workers correctly in calculations helps businesses avoid unexpected penalties and plan benefits accordingly.
Step 3: Determine ALE Status
Add the monthly totals for full-time employees and FTEs
Calculate this sum for all 12 months of the year
Divide by 12 to find the annual average
If the result equals 50 or more, the business qualifies as an ALE for the following calendar year
Client Note: ALE status requires offering Minimum Essential Coverage (MEC) to at least 95% of full-time employees to avoid IRS penalties.
Broker Solutions from Evolved Benefits
Minimum Essential Coverage Options
Evolved Benefits offers MEC plans that satisfy ACA requirements while managing costs. These plans serve as an effective baseline for clients meeting ALE thresholds.
Supplemental Coverage Solutions
Worksite benefits to address high-deductible gaps
Voluntary benefits that enhance employee financial security
Options specifically designed to complement MEC plans
How Brokers Add Client Value
Accurate Assessment
Help clients understand how their specific workforce composition affects ALE status and benefits obligations.
Strategic Planning
Recommend right-sized solutions that ensure compliance while considering budget constraints.
Employee Retention Support
Extend benefits options to part-time and variable-hour workers to reduce turnover and boost satisfaction.
Compliance Calendar Considerations
ALE status is determined based on the previous calendar year's employee count
Benefits compliance planning should begin well before the determination year ends
Regular workforce monitoring helps avoid compliance surprises
Taking Action
Insurance brokers who master ALE calculations position themselves as essential advisors. By identifying clients who may unknowingly qualify as ALEs, you protect them from potential penalties while creating opportunities to expand their benefits offerings.
Evolved Benefits provides comprehensive support for brokers working with clients at or near the ALE threshold. Our team handles everything from initial consultation through implementation, allowing you to focus on client relationships.
For assistance with ALE calculations or to discuss specific client scenarios, contact Evolved Benefits through our website or LinkedIn.
We offer strategies for winning new business, securing broker-of-record status, and retaining existing clients through 2025 and beyond.