ACA Employer Mandate
50
FTE Threshold
Applicable Large Employer
8.39%
Affordability
2024 indexed (verify current)
95%
Coverage Std
Of full-time + dependents
drive through every gate or pay the penalty
The ACA Tollbooth
Employers with 50+ FTE enter the highway. Three gates ahead. Stop at any gate without the right ticket — Penalty A or B applies.
how to read this
- › The 50 FTE entry sign determines if your car is on the highway at all. Below that, no mandate.
- › Gate 1 fails → Penalty A (covers all full-time employees, not just affected).
- › Gate 2 or 3 fails → Penalty B (only the employees who got premium tax credits).
- › Pass all three → file Forms 1094-C and 1095-C as proof of safe passage.
how the FTE count actually works
FTE Math, Worked
The 50 in "50 FTE" is full-time-EQUIVALENT, not full-time bodies. Part-time hours aggregate.
full-time
30
30+ hrs/wk · count as 1 each
= 30 FTE
part-time pool
24 × 60
PT employees · monthly hrs
÷ 120 = 12 FTE
total
42
FTE total this month
not yet ALE (under 50)
Exam Traps
50 is full-time EQUIVALENT, not full-time
Part-time hours aggregate. Two 20-hr employees = roughly one FTE for threshold purposes. Many companies miss the trigger by counting only full-timers.
Penalty A and Penalty B are alternatives
They cannot apply at the same time to the same employee. The exam tests scenarios that lead to one or the other.
Spouses are NOT in the mandate
Coverage offered to employees and dependents (children) only. Spouse coverage is not required for mandate compliance.
Affordability uses LOWEST self-only cost
Calculated against the employees lowest available self-only premium, not the family rate. The exam tests the comparator.
Spouses out of scope
Mandate covers employees + dependents (children). Spouse coverage not required.
Three gates, two penalties
Coverage 95%. Affordable. Minimum value. Pass all three to satisfy the mandate.
Employers with 50+ FTE drive through the tollbooth. Smaller orgs are exempt.
Did you offer essential coverage to 95% of full-timers (and their kids)? If not, Penalty A.
Was the lowest-cost self-only coverage under the indexed percent of household income? If not, Penalty B.
Did the plan cover at least 60% of average medical costs? If not, Penalty B.
Mandate satisfied for that month. Forms 1094-C and 1095-C document the proof.
Ready to test your PHR knowledge?
1,700+ practice questions written by certified professionals.
Start Practicing PHR