The ACA’s Employer Mandate and Look-Back Measurement Method

The Affordable Care Act’s Employer Mandate (i.e., Employer Shared Responsibility requirement) affects all Applicable Large Employers (ALEs). An ALE is generally defined as an employer that employed at least 50 full-time and full-time equivalent employees on average in the previous calendar year. To help avoid potential penalties, many employers have implemented tracking systems embedded within their payroll and HRIS systems that assist them in identifying full-time employees (defined as employees that average 30 or more hours a week) and determining whether they may be subject to penalties for failing to offer those full-time employees medical coverage during the calendar year.

ALEs are required to provide information reporting under the Employer Shared Responsibility rules to individuals and the Internal Revenue Service (IRS). Since ALEs must comply with the reporting obligation for the 2023 calendar year in the first quarter of 2024, now is a good time for employers to reacquaint themselves with the ins and outs of the rules under the Employer Shared Responsibility provisions.

Topics covered include:

• What criteria determines whether an employer may be considered an ALE (applicable large employer) and subject to the Employer Mandate and reporting requirement(s)?
• What measurement methods are available for identifying full-time employees?
• What are some of the differences between a standard and an initial measurement period, and how do they intertwine?
• What are some considerations when handling position changes between part-time and full-time?
• How can a leave of absence impact full-time status under the look-back measurement method?
• What are some potential pitfalls when administering the look-back measurement method?

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