IRS penalty · per employee
$2,970
ALE threshold crossing
Crossing 50 full-time equivalent employees mid-year triggers Applicable Large Employer status. Most employers discover this after the IRS sends a Letter 226-J.
ACA Compliance
The IRS penalty for ACA non-compliance is $2,970 per employee.
Kreto monitors your FTE count, ALE status, and 1095-C filings continuously \u2014 so you never get a Letter 226-J you did not expect.
The Problem
Where ACA compliance fails
Failure modes
Resolution time
6-12 mo
1095-C filing errors
Incorrect offer codes, wrong affordability calculations, or missing months on 1095-C forms generate automated IRS penalty proposals that take months to resolve.
Penalty risk · full workforce
$297,000
Coverage gaps
Failing to offer minimum essential coverage to 95% of full-time employees in any month creates penalty exposure for the entire workforce.
How Kreto Solves It
Continuous ACA compliance monitoring
Connect payroll and benefits data
Kreto ingests your payroll records and benefits enrollment to calculate FTE counts monthly.
ALE status monitoring
We track your full-time equivalent count across all entities and alert you before you cross the 50-FTE threshold.
Affordability verification
Kreto applies all three safe harbors (W-2, Rate of Pay, Federal Poverty Line) and flags any employee whose offer fails affordability.
1095-C data validation
Before filing, Kreto validates every line of every 1095-C against payroll data to catch errors before the IRS does.
What Kreto Monitors
Every ACA data point, tracked
- FTE count calculated monthly
- ALE status threshold tracking
- Affordability safe harbor compliance
- Minimum value requirements verification
- 1095-C data accuracy validation
Example in action
Illustrative scenario: Growing employer crosses ALE threshold
Employer
48 FTEs, multi-state
Issue Found
Crossed 50 FTEs mid-year
Penalty Exposure
$297,000
Consider a staffing company with 48 full-time equivalents that hires seasonal workers and crosses 50 FTEs in June. Kreto would flag the threshold crossing as it happens and alert the employer to offer minimum essential coverage within the lookback period — the window in which an exposure of this size can still be avoided, rather than after the IRS sends a notice.
Do not wait for a Letter 226-J
Start your free trial and get continuous ACA compliance monitoring for every entity in your organization.