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Size Matter - The Affordable Care Act and Employers!

May 19, 2015
Article #305
Author: Peter S. Muffoletto, C.P.A.

The size and structure of a workforce whether that be small or large determines how the Affordable Care Act (ACA otherwise known as Obamacare) applies to employers.

The number of employees an employer employed during the prior year determines whether it is an applicable large or small employer for the current year under ACA.

This is important because two provisions of the Affordable Care Act apply only to applicable large employers.

These are the employer Shared Responsibility Provision, and the Employer Information Reporting Provision for offers of minimum essential coverage.

An employer’s size is determined by the number of its employees.

  • An employer with 50 or more full-time employees or full-time equivalents is considered an Applicable Large Employer, also known as an ALE.
  • For purposes of the employer shared responsibility provision, the number of employees a business had during the prior year determines whether it is an ALE the current year.

Employers make the determination by calculating the average number of employees employed throughout the year including workforce fluctuations.

  • Employers with fewer than 50 full-time or full-time equivalent employees are not considered large employers.

To determine its workforce size for a year, the total number of full-time employees for each month of the prior calendar year must be added to the total number of full-time equivalent employees for each calendar month of the prior calendar year, then divided by 12 to determine if the 50 employee threshold has been met, thereby requiring the employer to comply with the Shared Responsibility Provision, and the Employer Reporting Provision.


All this to cover 1.7 million citizens that could have been covered under existing plans out of a national population of 317,000 – or .005 of those that live here.


Our emphasis at Muffoletto & Company is to provide you the proper guidance and understanding of the system so that you avoid taxes to the extent that the law allows.

Should you have questions relating to these matters, tax, financial, and accounting issues, give us a call at (818) 346-2160.

You can also visit us on the web at!


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