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ACA & Employers: How the Size of Your Workforce Affects Your Responsibilities

IRS Health Care Tax Tip 2016-69, September 14, 2016

Two parts of the Affordable Care Act apply only to applicable large employers. These are the employer shared responsibility provisions and the employer information reporting provisions for offers of minimum essential coverage.

Whether an employer is an ALE is determined each calendar year, and generally depends on the average size of an employer’s workforce during the prior year.  

How to Determine Workforce Size

To determine your workforce size for a year, you add your total number of full-time employees for each month of the prior calendar year to the total number of full-time equivalent employees for each calendar month of the prior calendar year and divide that total number by 12. If the result is 50 or more employees, you are an applicable large employer.

Fewer than 50 Employees

If you have fewer than 50 full-time employees – including full-time equivalent employees – on average during the prior year, you are not an ALE for the current calendar year. Therefore, you are not subject to the employer shared responsibility provisions or the employer information reporting provisions for the current year.

However, if your organization sponsors a self-insured health plan that provides minimum essential coverage, you do have certain reporting requirements.

You may be eligible for the Small Business Health Care Tax Credit and can find more information about how the Affordable Care Act affects you on the ACA Tax Provisions for Small Employers page.

50 or More Employees

If you have at least 50 full-time employees, including full-time equivalent employees, on average during the prior year, you are an ALE for the current calendar year. If so, you are therefore subject to the employer shared responsibility provisions and the employer information reporting provisions.

For more information on the employer shared responsibility provisions in general, see IRS.gov/aca.  For more information on the information reporting responsibilities that apply to applicable large employers see our Questions and Answers on Reporting of Offers of Health Insurance Coverage by Employers.

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Page Last Reviewed or Updated: 14-Sep-2016