Under the Affordable Care Act (ACA), which of the following employers is an 'Applicable Large Employer' (ALE) subject to the Employer Shared Responsibility provisions?

Answer options:

An employer with 25 full-time employees.

An employer with 40 full-time employees and no part-time employees.

An employer with 40 full-time employees and 20 part-time employees who each work 15 hours per week.

An employer with 100 employees who all work 10 hours per week.

How to approach this question

ALE Threshold = 50 Full-Time Equivalent (FTE) employees. FTE = Full Time + (Total Part Time Hours / 120 per month or 30 per week).

Full Answer

C.An employer with 40 full-time employees and 20 part-time employees who each work 15 hours per week.✓ Correct

An ALE is an employer with 50 or more full-time equivalent employees on average during the prior year. FTEs from part-time employees are calculated by taking total hours worked by part-time employees in a month divided by 120. Here, 20 employees x 60 hours/month (15/week x 4) = 1200 / 120 = 10 FTEs. 40 Full + 10 FTE = 50. The employer is an ALE.

Common mistakes

Ignoring part-time employees in the count.

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