What is an Applicable Large Employer (ALE) under the ACA?

An Applicable Large Employer is a company that averaged 50 or more full-time employees plus full-time equivalents in the prior calendar year. Full-time means 30+ hours per week; part-time hours are converted to equivalents by dividing total monthly part-time hours by 120. ALEs must offer qualifying coverage and file Forms 1094-C and 1095-C.

How big are the ACA employer penalties in 2026?

For plan years beginning in 2026: §4980H(a) is $3,340 per year per full-time employee (minus the first 30) if coverage isn't offered to at least 95% of full-time staff. §4980H(b) is $5,010 per year for each full-time employee who gets subsidized exchange coverage because the employer's offer was unaffordable — above 9.96% of household income in 2026. Separate filing penalties run $340 per late or incorrect form, up to $680 per employee.

Why are variable-hour employees an ACA compliance trap?

Employees whose hours vary — therapists in ABA clinics, field crews, hourly staff — must be measured over an IRS look-back period to determine full-time status. Companies that don't run look-back measurement routinely misclassify staff, cross the 50-FTE threshold without noticing, and discover the missed filings only when an IRS Letter 226-J arrives.

Is this ACA audit really free?

Yes. The self-audit runs in your browser and nothing is stored on the site. If you want the written assessment reviewed by Hipson's ACA filing team, you send us your results by email and we return the assessment at no cost — that is the entire model: we prove the expertise first.

Free tool · 3 minutes · Runs in your browser · Nothing stored

The ACA compliance audit, before the IRS writes first.

Three minutes: your employee counts, hours, what you offer, and what you've filed. You get your Applicable Large Employer status, your estimated §4980H penalty exposure for 2026, and the specific gaps to close — reviewed by the team that files these for a living.

Start the audit

Est. 1996 · 350+ Texas companies · Done by the team that files these

$3,340/employee

§4980H(a) 2026 penalty

$5,010/employee

§4980H(b) 2026 penalty

$680/employee

§6721/§6722 filing penalties

Run the audit

Use last calendar year's numbers where you can. Estimates are fine — the point is to find out whether you have a problem, not to file your forms today.

Step 1 of 3 — Your workforce

Your workforce

Full-time employees (30+ hours/week)

Part-time or variable-hour employees Therapists, hourly staff, field crews — anyone under 30 hrs/week or with hours that swing.

Average weekly hours for those part-time/variable staff

Runs entirely in your browser. Nothing is stored on this site or sent anywhere until you choose to email your results.

Why companies fail this audit

It is almost never negligence. It is three structural blind spots.

Blind spot 01

"Our payroll company handles it"

Payroll platforms process paychecks; most do not measure variable-hour eligibility or prepare 1094-C/1095-C correctly. We have met payroll veterans of fifteen years who had never heard of look-back measurement.

Blind spot 02

"Our CPA handles it"

A two-person CPA shop doing your taxes is not tracking monthly full-time equivalents. One of our own 300-life clients found this out when Justin walked their CPA through the rules — on a call the CPA didn't know he needed.

Blind spot 03

"It's only a problem when you get caught"

True — and the IRS catches it from your own W-2 and exchange data, years later, with interest. Letter 226-J penalty assessments in the market have reached the high six figures. The fix costs a fraction of the letter.

Three minutes now, or a Letter 226-J later.

Run the audit. If you're clean, you'll know. If you're not, you'll know what to fix — and who does this every day.