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Navigating ACA for Applicable Large Employers: Beyond Penalties, Unveiling Its True Significance

Ashley Pope • August 21, 2023
The Affordable Care Act (ACA) remains a cornerstone of healthcare policy in the United States, despite the fact that it has been modified and challenged over the years. For Applicable Large Employers (ALEs), understanding and complying with the ACA is not only a legal requirement but also a crucial step towards ensuring the well-being of their employees.
Who is an ALE?

An Applicable Large Employer (ALE) is defined as a company with 50 or more full-time employees or full-time equivalent employees (FTEs) in the previous year. This includes for-profit, non-profit, and government entity employers. The ACA requires that these employers offer their full-time employees and their dependents affordable health insurance that provides minimum essential coverage.

Employer Mandate

The "employer mandate" is a key provision of the ACA that applies to ALEs. It requires them to offer affordable health insurance that provides a minimum level of coverage to their full-time employees and their dependents. If an ALE fails to comply with the employer mandate, they may be subject to significant penalties. 

An ALE could be faced with one of both of the following penalties:

  • 4980H(a) - Failure to offer at least minimum essential coverage to at least 95% of eligible employees and their dependents
  • 4980H(b) - Failure to provide affordable, minimum value coverage to an eligible employee

Importance of Compliance


A. Legal and Financial Implications: Non-compliance with the ACA can result in hefty penalties, also known as "employer shared responsibility payments." The penalties are calculated based on the number of full-time employees and can be substantial, especially for large organizations. Think in terms of hundreds of thousands of dollars.


B. Employee Well-being: Offering affordable and comprehensive health insurance is not just about avoiding penalties. It's also about taking care of your employees, who are the backbone of your organization. Health insurance can help protect your employees from high medical costs, ensure they have access to necessary healthcare services, and contribute to their overall well-being and job satisfaction.


C. Employee Retention and Recruitment: In the current overly competitive job market, offering health insurance can make your organization more attractive to potential employees and help retain existing ones. Many job-seekers consider health benefits as a crucial factor in their employment decisions.


D. Productivity and Performance: Healthy employees are more productive and engaged in their work. By providing health insurance, you're investing in the health of your workforce, which can translate to improved performance, reduced absenteeism, and a more productive work environment.

Staying Compliant


Compliance with the ACA involves several steps, including determining your ALE status, offering compliant health insurance, and reporting to the IRS. Here are some tips for staying compliant:


A. Regularly Review Your ALE Status: Your ALE status can change from year to year based on the size of your workforce. Make sure to regularly assess your status and adjust your health insurance offerings accordingly.


B. Understand the ACA Requirements: Familiarize yourself with the ACA requirements, including what constitutes affordable and minimum essential coverage.


C. Keep Accurate Records: Keep detailed records of your employees, their work hours, and the health insurance coverage you offer. This will be crucial for IRS reporting and in case of an audit.


D. Seek Professional Assistance: Navigating the complexities of the ACA can be challenging. Consider seeking assistance from professionals who specialize in ACA compliance.  Be sure that any compliance software you utilize is staying up to date with both past and current regulations, not all software is created equal.


In conclusion, ACA compliance is essential for ALEs, not only to avoid legal and financial repercussions but also to ensure the health and well-being of their employees. By understanding the ACA requirements and taking the necessary steps towards compliance, employers can contribute to a healthier and more productive workforce.


About SyncStream

SyncStream has been e-filing for businesses since the inception of the Affordable Care Act with a tenured staff of ACA knowledge experts. For assistance with electronic filing, ACA compliance, and penalty assistance, contact Syncstream. ACA Compliance needs can be simplified with SyncStream’s Total ACA which includes electronic delivery.

Have Questions or Need More Information?

Avoid Penalties: Understanding ACA Reporting Mistakes and the Different Types of IRS Penalty Letters

Register for March 20th - Avoid Penalties: Understanding ACA Reporting Mistakes and the Different Types of IRS Penalty Letters Before the March 31st Deadline

By Natalie Frantz • February 14, 2025
Join us to ensure you’re avoiding common mistakes that could lead to costly penalties. With the ACA filing deadline on March 31, 2025, fast approaching, this is your chance to ensure your reporting is error-free and penalty-proof. Join us as our Director of ACA Services, Ashley Pope, disusses how to get ahead of the curve and avoid the pitfalls that many organizations face during filing season.
ACA for Dummies: Back to the Basics of ACA Reporting for 2025

Register for April 24th - ACA for Dummies: Back to the Basics of ACA Reporting for 2025

By Natalie Frantz • February 14, 2025
Join us as SyncStream kicks off 2025 ACA Reporting year with going back to the beginning. This webinar is designed to provide a beginner-friendly approach that revisits the fundamentals of ACA Reporting. Whether you are new to ACA, seeking a refresher, or feeling bewildered by ACA regulations, this webinar is tailored just for you!
Download | 2024 Employer's Guide to ACA Reporting

2024 Employer's Guide to ACA Reporting

By Stacy Barrow J.D • January 30, 2025
As part of the Tax Cuts and Jobs Act (TCJA), the Affordable Care Act’s (ACA) individual mandate penalty was repealed effective January 1, 2019; however, the TCJA did not repeal the employer mandate nor its reporting requirements. Employers should be prepared to respond to IRS Employer Shared Responsibility Provision (ESRP) penalty letters and continue to prepare for 2024 reporting, which will occur in the first quarter of 2025.
The Affordable Care Act (ACA) remains a cornerstone of healthcare policy in the United States, despite the fact that it has been modified and challenged over the years. For Applicable Large Employers (ALEs), understanding and complying with the ACA is not only a legal requirement but also a crucial step towards ensuring the well-being of their employees.
Who is an ALE?

An Applicable Large Employer (ALE) is defined as a company with 50 or more full-time employees or full-time equivalent employees (FTEs) in the previous year. This includes for-profit, non-profit, and government entity employers. The ACA requires that these employers offer their full-time employees and their dependents affordable health insurance that provides minimum essential coverage.

Employer Mandate

The "employer mandate" is a key provision of the ACA that applies to ALEs. It requires them to offer affordable health insurance that provides a minimum level of coverage to their full-time employees and their dependents. If an ALE fails to comply with the employer mandate, they may be subject to significant penalties. 

An ALE could be faced with one of both of the following penalties:

  • 4980H(a) - Failure to offer at least minimum essential coverage to at least 95% of eligible employees and their dependents
  • 4980H(b) - Failure to provide affordable, minimum value coverage to an eligible employee

Importance of Compliance


A. Legal and Financial Implications: Non-compliance with the ACA can result in hefty penalties, also known as "employer shared responsibility payments." The penalties are calculated based on the number of full-time employees and can be substantial, especially for large organizations. Think in terms of hundreds of thousands of dollars.


B. Employee Well-being: Offering affordable and comprehensive health insurance is not just about avoiding penalties. It's also about taking care of your employees, who are the backbone of your organization. Health insurance can help protect your employees from high medical costs, ensure they have access to necessary healthcare services, and contribute to their overall well-being and job satisfaction.


C. Employee Retention and Recruitment: In the current overly competitive job market, offering health insurance can make your organization more attractive to potential employees and help retain existing ones. Many job-seekers consider health benefits as a crucial factor in their employment decisions.


D. Productivity and Performance: Healthy employees are more productive and engaged in their work. By providing health insurance, you're investing in the health of your workforce, which can translate to improved performance, reduced absenteeism, and a more productive work environment.

Staying Compliant


Compliance with the ACA involves several steps, including determining your ALE status, offering compliant health insurance, and reporting to the IRS. Here are some tips for staying compliant:


A. Regularly Review Your ALE Status: Your ALE status can change from year to year based on the size of your workforce. Make sure to regularly assess your status and adjust your health insurance offerings accordingly.


B. Understand the ACA Requirements: Familiarize yourself with the ACA requirements, including what constitutes affordable and minimum essential coverage.


C. Keep Accurate Records: Keep detailed records of your employees, their work hours, and the health insurance coverage you offer. This will be crucial for IRS reporting and in case of an audit.


D. Seek Professional Assistance: Navigating the complexities of the ACA can be challenging. Consider seeking assistance from professionals who specialize in ACA compliance.  Be sure that any compliance software you utilize is staying up to date with both past and current regulations, not all software is created equal.


In conclusion, ACA compliance is essential for ALEs, not only to avoid legal and financial repercussions but also to ensure the health and well-being of their employees. By understanding the ACA requirements and taking the necessary steps towards compliance, employers can contribute to a healthier and more productive workforce.


About SyncStream

SyncStream has been e-filing for businesses since the inception of the Affordable Care Act with a tenured staff of ACA knowledge experts. For assistance with electronic filing, ACA compliance, and penalty assistance, contact Syncstream. ACA Compliance needs can be simplified with SyncStream’s Total ACA which includes electronic delivery.

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