Small business · Growing past 50

The ACA employer mandate: when you hit 50

Under 50, offering coverage is your choice. At 50 full-time employees including equivalents, the rules change. Here’s exactly how the IRS counts.

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50 FT + FTE
30 hrs/wk or 130/mo
Based on prior year

Check my headcount

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Step 2 of 3Your team Your name Company / organization Employees

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Short answerIf you had at least 50 full-time employees, including full-time equivalents, on average during the prior year, you’re an applicable large employer (ALE) this year and subject to the employer shared responsibility and reporting rules.^[1] The vast majority of employers fall below that line.^[2]

How to count

A full-time employee averages at least 30 hours of service a week, or 130 hours in a month.^[1]
For full-time equivalents, add up the hours of all non-full-time employees for the month, counting no more than 120 per person, then divide by 120.^[1]
Add full-time and FTE counts for each month of the prior year and average them.^[1]
Companies with common ownership or that are otherwise related under Internal Revenue Code section 414 are generally combined.^[1]

Seasonal exception

You aren’t treated as having more than 50 if you exceed 50 for 120 days or fewer in the year and the employees above 50 during that period are seasonal workers.^[1]

What an ALE must do

Offer minimum essential coverage that is affordable and provides minimum value to full-time employees and their dependents, or potentially make an employer shared responsibility payment.^[2]
The first payment can apply if you don’t offer coverage to at least 95% of full-time employees and at least one gets a Marketplace premium tax credit.^[2] It equals the number of full-time employees minus up to 30, times $2,000 as adjusted for inflation.^[3]
The second payment can apply for each full-time employee who gets a premium tax credit even if you offer coverage to 95%.^[2]
For 2027 plan years, the affordability percentage is 10.22% of household income.^[4]

Near the line? Compare ICHRA and group and see benefits for 50+ employers.

Sources

IRS, Determining if an employer is an applicable large employer. https://www.irs.gov/affordable-care-act/employers/determining-if-an-employer-is-an-applicable-large-employer
IRS, Employer shared responsibility provisions. https://www.irs.gov/affordable-care-act/employers/employer-shared-responsibility-provisions
IRS, Questions and answers on employer shared responsibility provisions. https://www.irs.gov/affordable-care-act/employers/questions-and-answers-on-employer-shared-responsibility-provisions-under-the-affordable-care-act
IRS Rev. Proc. 2026-26 (2027 applicable percentage table, 2.15% to 10.22%). https://www.irs.gov/pub/irs-drop/rp-26-26.pdf

Checked October 16, 2026. 2027 Marketplace plans and final 2027 rates aren’t published yet; we’ll update this page when they are.

Frequently asked questions

How many employees make you an applicable large employer?

At least 50 full-time employees, including full-time equivalents, on average during the prior calendar year.

Do part-time employees count toward 50?

Their hours do. Combine non-full-time employees' hours for each month, up to 120 per person, and divide by 120.

Do related businesses count together?

Generally yes. Companies with common ownership or otherwise related under IRC section 414 are combined to determine ALE status.

Will you sell my information?

No. Your information goes to Nexus Benefit Solutions only and is never sold.

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