Even If You Have Less Than 50 Employees You May Still Be Required To Provide A Group Benefit Plan
Under the Affordable Care Act (ACA), employers with 50 or more full-time employees must provide health insurance to their workers or face steep penalties. However, many companies with less than this number erroneously believe they are automatically exempt from the rule. Here are two times when you will still be required to provide group benefits to employees even though you have less than 50 full-time employees.
Your Part-Time Employees Push You Over the Threshold
Some companies seek to avoid having to provide health insurance by ensuring the majority of their employees only work part-time (defined as working less than 30 hours per week, 130 hours per month). However, the ACA accounts for this. Employers are required to tally up all the hours their part-time employees work during the month and divide the total by 120 to get the equivalent number of full-time employees that would count toward the total amount for the company.
For example, if you had 6 part-time employees who worked an average of 20 hours per week, they would equal the equivalent of 4 full-time employees (4 weeks x 20 hours x 6 employees/120 hours). Thus, if you already had 46 full-time employees, these 6 part-time workers would push you to the threshold for qualifying as an applicable large employer (ALE) who would need to supply its workers with health benefits.
You Have Multiple Businesses
Another area that causes confusion for employers is when they own multiple companies, but none of those businesses have more than 50 employees each. They think since each company has less than the required amount of workers, they don't qualify as ALEs and can forgo offering benefits.
Unfortunately, that's not true. If the companies have a common owner, the government will classify the organization as an ALE based on the total number of employees it has throughout all the companies. For example, if you own 3 companies but only employ 25 workers at each of them, you would still be considered an ALE because you have a total of 75 people working for you. Each company within the organization would be required to offer the employees group health benefits as a result.
Determining whether you are an ALE can be confusing. It's best to consult with a health insurance benefits professional for assistance with figuring out if your company falls into that category and help selecting the right plan for your employees if you do. Contact a company, like NFP, P & C, Inc., for more help.