Are you a small or large group employer? Do you utilize part time help? Are you sure about your answer to my first question? The great debate these days is whether an employer is considered small or large group and therefore required to offer group health insurance effective January 1st. Lets take a look at how employees are counted and what the means for your business.
Effective January 1st, employers are required to count the number of full time employees (the Fed's redefined full time as 30 hours per week) as well as the full time equivalents. To calculate full time equivalents we take the annual sum of all part time hours and divide it by 1,440. Whatever you come up with are your part time equivalents and is then added to those working over 30 hours. If those two numbers combined are 50 or more, you're large group and therefore required to offer coverage. You face the Employer Shared Responsibility penalty if you do not. If it's 49 or less you're small group and not required to do anything.
If you followed the math above you can see how any business that utilizes part time help could be surprised by the results. You could have a group of 10 full time office staff that believes they are small group because everyone else is part time, only to find out they are large group when the IRS comes knocking.
To complicate things even further, many employers are surprised to learn that if they own multiple businesses (which many do) they may be classified as a "controlled group" by the IRS. The Controlled Group Provision was introduced in 1964 as part of a tax reform package that was intended for larger corporations that were intentionally re-organizing their operation as a number of smaller businesses to take advantage of small business tax breaks. This provision affects any group of companies with similar ownership meeting various IRS definitions and testing. Obviously the grouping of multiple companies can increase employee counts moving some small group employers into the large group category and thus changing their requirements to offer affordable group health insurance. To determine whether you are a controlled group visit Controlled Group Definition or discuss with your Accountant.
If you find yourself north of 50 employees, you are required to offer health coverage. You will be required to pay at least 50% of the employee's premium (tax deductible) and you will be required to have 50% to 75% employee participation. There is no doubt that contribution and participation are major financial challenges for any employer new to the world of group health insurance, but with the right strategy we can help make group health insurance a positive for you and your company.
