Glossary of Terms
ACA – The Affordable Care Act is a comprehensive health care reform law enacted in March 2010 that impacts both employers and individuals.
ALE – Applicable Large Employers are generally employers that, together with other employers in their controlled group, employed 50 or more full-time and full-time equivalent (FTE) employees in the prior calendar year.
Controlled Group - When two or more entities are treated as a single employer under section 414(b), (c), (m), or (o) of the Internal Revenue Code.
FTE – Full-Time Equivalent employees are calculated by adding all the hours worked by part-time employees (those working less than 30 hours per week) in a month and dividing by 120. Note: If the part-time employee works more than 120 hours but less than 130 hours during the month, only 120 hours must be included in the calculation.
Fully insured – Generally, a type of plan purchased by the employer from an insurance company where the insurance company assumes the health coverage risk.
Self-insured – Generally, a type of plan where the employer assumes the risk and pays participants' claims out of its general assets or a trust.
Level-funded – Generally, a type of self-insured plan where rates are based on group experience. They typically have fixed monthly payments that are used to pay claims and maintain stop-loss coverage. For instance, one year rates may be low due to a healthy population of the group but that could change the next year due to illness/injury in the group.
Form 1095-C – ALE members must file this form with the IRS and distribute it to certain employees to report information concerning the coverage offered.
Form 1094-C – This is the transmittal form that must accompany Form 1095-C when ALE members file it with the IRS.
Form 1095-B – Employers that are not ALE members and offer self-insured health coverage use this form to report certain information to covered individuals and the IRS about the months of coverage offered to employees. This form is also used by insurers to show coverage provided to individuals under a fully insured plan.
Form 1094-B – This is the transmittal form that must accompany Form 1095-B when non-ALE members who offer self-insured coverage file with the IRS.