Crossing 50 employees changes your obligations under the Affordable Care Act. The threshold is more specific than most employers assume, and the timing catches people out.
The threshold
You are an applicable large employer for a calendar year if you averaged at least 50 full-time employees, including full-time equivalents, during the prior calendar year.
Read that twice. The determination is based on last year. You do not become an ALE the day you hire your 50th person — you become one on January 1 of the following year, based on the year that just ended.
Which means the year you are growing is the year to be counting.
What counts as full-time
An employee averaging at least 30 hours of service per week during a calendar month, or at least 130 hours of service during the month.
Not your internal definition of full-time. Not what the handbook says. Thirty hours.
How full-time equivalents are calculated
- For each month, add up the hours of service of all your non-full-time employees, counting no more than 120 hours for any one employee.
- Divide that total by 120. That is your FTE count for the month.
- Add your full-time employees and your FTEs together for each month of the year.
- Add the twelve monthly totals and divide by 12.
Fifty or above, you are an ALE.
Thirty-eight full-time employees plus twenty part-timers averaging 60 hours a month gives 20 × 60 = 1,200 hours, divided by 120 = 10 FTEs. Total 48. Under the threshold — but not by much, and one busy quarter would change it.
What arrives with ALE status
- Employer shared responsibility — offer minimum essential coverage that is affordable and provides minimum value to full-time employees and their dependents, or face a potential penalty
- Annual reporting on Forms 1094-C and 1095-C
- Tracking obligations that make the reporting possible — measurement periods, stability periods, and every offer of coverage
The reporting is the visible part. The tracking is the work, and it has to run all year. You cannot reconstruct twelve months of offer-of-coverage data in January, which is exactly what employers who cross the threshold unprepared end up trying to do.
If you are near the line
Count now, not in December. Variable-hour and seasonal employees are where the calculation gets genuinely difficult, and there are specific rules for both. If you are between 45 and 55, that is worth a conversation before the year closes.
Source: IRS, Determining if an Employer is an Applicable Large Employer
Verified against primary sources in August 2026. Deadlines and thresholds change — confirm against current IRS and DOL guidance, or call us at (920) 243-4006 and we will check it with you.
This is the work we do.
Benefi administers group benefit plans for employers — including the deadlines above. If you are not certain where your plan stands, that is a short conversation, not a project.