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ACA Reporting

Employer mandate overview

Employers must offer health insurance that is affordable and provides minimum value to 95% of their full-time employees and their children up to the end of the month in which they turn age 26, or be subject to penalties. This is known as the employer mandate. It applies to employers with 50* or more full-time employees, and/or full-time equivalents (FTEs). Employees who work 30 or more hours per week are considered full-time.

Employer mandate overview

Affordable coverage

Coverage is considered "affordable" if employee contributions for employee-only coverage do not exceed a certain percentage of an employee's household income (9.78% in 2020 and 9.83% in 2021).

Based on IRS safe harbors, coverage is affordable if the cost of self-only coverage is less than the indexed percentage of the following:

  • Employee's W-2 wages (reduced by any salary reductions under a 401(k) plan or cafeteria plan)
  • Employee's monthly wages (hourly rate x 130 hours per month), OR
  • Federal Poverty Level for a single individual

In applying wellness incentives to the employee contributions used to determine affordability, assume that each employee earns all wellness incentives related to tobacco use, but no other wellness incentives.

Minimum value

A plan provides "minimum value" if it pays at least 60% of the cost of covered services(deductibles, copays and coinsurance). The U.S. Department of Health & Human Services has developed a minimum value calculator that can be used to determine if a plan provides minimum value.


Two provisions of the Affordable Care Act apply only to applicable large employers (ALEs): the employer shared responsibility provision and the employer information reporting provision for offers of minimum essential coverage. In addition, self-insured ALEs – that is, employers who sponsor self-insured group health plans – have additional provider information reporting requirements.

Employers must determine their ALE status each calendar year based on the average size of their workforce during the prior year. Employers that had at least 50 full-time employees, including full-time equivalent employees, on average last year, are most likely an ALE for the current year.

Controlled Group/Common Ownership

Certain employer aggregation rules apply in determining whether an employer is an ALE subject to the employer information reporting provisions. Under those rules, all employers treated as a single employer under Internal Revenue Code section 414(b), (c), (m), or (o) are treated as one employer for purposes of determining ALE status.The employers that comprise the Aggregated ALE Group are each referred to as ALE Members.

The employer information reporting requirements are applied separately to each Aggregated ALE Group Member comprising the ALE, consistent with the approach used to determine any assessable payment. For example, each ALE Member is liable for its own information reporting requirements, and is not liable for the information reporting requirements of any other entity in the controlled group comprising the Aggregated ALE Group.