Alabama Home Care Agencies and the ACA Employer Mandate: Who Has to Offer Coverage

Is your agency an Applicable Large Employer?

Count full-time employees (30+ hours a week or 130+ a month) and add full-time equivalents from everyone else: total part-time hours in the month ÷ 120. Average the monthly totals over the prior calendar year.

Worked example. An Alabama agency has 40 caregivers and office staff at 130+ hours a month, plus 24 part-time caregivers averaging 50 hours a month.

• Full-time employees: 40
• Part-time FTEs: 24 × 50 = 1,200 hours ÷ 120 = 10
• Total: 50 → the agency is an ALE. Fifty is the threshold, not fifty-one.

Two home care specifics. Entities under common ownership are combined under the controlled-group rules, so multiple agency LLCs or franchise territories with the same owners count as one employer. And caregivers with variable hours can be classified using the IRS look-back measurement method (a 3–12 month measurement period followed by a stability period), which is how most agencies decide who must be offered coverage without re-running the math every month.

IRS, Identifying full-time employees ↗

What an ALE owes if it doesn't comply (2026 amounts)

• 4980H(a), no offer: if you don't offer minimum essential coverage to at least 95% of full-time employees and any one of them gets a subsidy on HealthCare.gov, you owe $3,340 per full-time employee minus the first 30. In the example above: (40 − 30) × $3,340 = $33,400 a year, triggered by a single subsidized caregiver.
• 4980H(b), unaffordable offer: if you offer coverage that's unaffordable or below minimum value, you owe $5,010 for each full-time employee who enrolls in a subsidized marketplace plan.

IRS Rev. Proc. 2025-26 ↗

Why Alabama's Medicaid decision changes your exposure

Penalties are only triggered when a full-time employee actually receives a premium tax credit on the marketplace. Who can get one depends on income:

Alabama is one of 10 non-expansion states. Caregivers earning 100-400% FPL can get subsidized marketplace coverage (which can trigger 4980H penalties for ALEs), but those under 100% FPL fall into the coverage gap with no subsidy eligibility. kff.org ↗

Alabama residents enroll through the federal marketplace, HealthCare.gov; open enrollment runs November 1 - January 15. healthcare.gov ↗

What counts as "affordable" for an Alabama caregiver in 2026

Coverage is affordable if the caregiver's self-only contribution is no more than 9.96% of household income. Since you can't know household income, the IRS provides three safe harbors:

The Alabama-specific point: at Alabama's $7.25 minimum, the rate-of-pay safe harbor is worse than the FPL figure. The crossover is about $10.03 an hour. If your lowest caregiver wage is below that, use the FPL safe harbor and price self-only coverage at or under $129.89 a month. Above it, rate of pay gives you more room. This is why low-cost MEC plans priced inside the FPL figure and CHOICE arrangements (formerly known as ICHRAs) are the two most common structures among agencies in low-minimum-wage states: either one blocks both the (a) and (b) penalties if set up correctly.

A CHOICE (ICHRA) counts as an offer of coverage. It's affordable if the caregiver's cost for the lowest-cost self-only silver plan on HealthCare.gov for their rating area, minus your monthly allowance, stays within the 9.96% test.

IRS Rev. Proc. 2025-25 ↗ · IRS HRAs ↗ · minimum wage → see the Alabama wage & hour page

2026 federal compliance calendar (Alabama adds nothing to this list)

There is no Alabama filing, no Alabama furnishing deadline, and no Alabama penalty. If you also employ caregivers who live in California, New Jersey, Massachusetts, Rhode Island, or DC under a self-insured plan, those states' reporting rules may apply to those employees; see the state-by-state ACA hub.

IRS, Information reporting by ALEs ↗

Alabama continuation coverage (mini-COBRA)

Alabama is one of the few states without a mini-COBRA law, so caregivers at agencies under 20 employees generally have no state continuation right after losing group coverage. aldoi.gov ↗

What Alabama does not require

Alabama has no state individual mandate or 1095 reporting, no auto-IRA program, and no paid family leave program; only federal ACA and COBRA rules apply. cri.georgetown.edu ↗

Frequently asked questions

We have 48 full-time caregivers and a handful of part-timers. Are we under the threshold?

Probably not. Add the part-timers' monthly hours and divide by 120. Two part-timers at 120 hours a month between them add one FTE, which puts you at 49; a third pushes you to 50 and ALE status the following year.

Does Alabama require us to file anything about health coverage with the state?

No. Alabama has no state individual mandate and no state 1095 reporting. Your only filing is federal (1094-C/1095-C) if you're an ALE.

Can a caregiver earning below the poverty line trigger a penalty against us?

Not in Alabama. Marketplace credits start at 100% FPL and Alabama hasn't expanded Medicaid, so caregivers below 100% FPL can't receive a credit and therefore can't trigger 4980H. Caregivers between 100% and 400% FPL can.

We pay $9.50 an hour. What's the most we can charge for self-only coverage?

Use the FPL safe harbor: $129.89 a month in 2026. At $9.50 the rate-of-pay method only allows $123.01, so FPL is the better harbor until wages pass about $10.03.

Does a CHOICE (ICHRA) count as offering coverage in Alabama?

Yes. An affordable CHOICE (ICHRA) satisfies both the 4980H(a) offer requirement and the (b) affordability test, measured against the lowest-cost silver plan on HealthCare.gov for each caregiver's rating area.

We're under 50 FTEs. Is there any reason to offer coverage?

No mandate applies, but agencies under 50 commonly offer a MEC or CHOICE (ICHRA) to reduce turnover, and the same affordability math determines what you can charge caregivers.