Updates to Employer Shared Responsibility for 2016


We’d like to provide our business clients with an update to employers’ responsibility as it relates to medical insurance for their employees.

The relief for applicable large employers (ALEs) with 50 to 99 full-time equivalents (FTEs) is no longer available for 2016.  This means that ALEs with 50 to 99 FTEs are required to offer affordable coverage that meets minimum essential coverage.  If one employee gets subsidized coverage on the market place, the penalty is:

  • $43,200 for employers with 50 FTEs
  • $151,200 for employers with 100 FTEs
  • $367,200 for employers with 200 FTEs
  • $1,015,200 for employer with 500 FTEs

A full-time employee is counted as 1 FTE if that employee works 30 hours per week or 130 hours per month.  Part time employees’ hours and divide by 120 to determine the number of FTE derived from part time employees.  This is measured on a monthly basis and averaged for the year.  Controlled-ownership groups are aggregated.

An employer with less than 50 FTEs is not an ALE.  An employer’s status as an ALE is based on the prior year’s FTEs.

A plan is considered affordable if the employee’s contribution for a single premium plan is less than or equal to 9.66% of:

  • Annual wages on Box 1 of W-2
  • Hourly wage X 130 hours, or monthly salary
  • Federal Poverty Line

With few exceptions, all medical insurance plans meet the Affordable Care Act’s requirements for minimum essential coverage.  Please confirm with your agent.