If like many business owners, you are still trying to find a way around, under, or out of the Affordable Care Act (ACA) mandates, the Affordable Care Act is the law of the land whether we like it or not. The good news, even for those employers not offering benefits to all full-time employees, is that it’s not as bad you’ve thought or heard. So in this time of transition, let’s reposition and redirect so that you are utilizing the right resources and taking the smartest steps for your business. Hopefully as you read further, you will better understand the importance of taking heed and taking good and proper care of the company you worked so hard to build.
A ‘Common’ Owner’s Misconception
The Department of Health and Human Services (HHS) has given employers with 50 – 99 full-time employees a break for 2015. Employers of this size do not need to provide coverage until 2016. An important item to consider is how many full-time employees do you have, especially if you operate multiple companies?
As a business with several interested partners sharing ownership in one company or as a common owner, you cannot separate yourself under the healthcare laws in an effort to skirt the once 50 FT employees (now 100 for 2015) mandate for healthcare coverage. Here are the rules as defined by the IRS.gov on common ownership aggregation. The government site addresses the question:
If two or more companies have a common owner, are they then combined for the purposes of determining whether they employ enough employees to be subject to the Employer Shared Responsibility provisions?
The IRS answer is:
Yes, section 4980H…under which companies that have a common owner are…treated as a single employer, and combined for purposes of determining whether or not they collectively employ at least 50 full-time employees (including full-time equivalents). If the combined total meets the threshold, then each separate company is subject to the Employer Shared Responsibility provisions, even those companies that individually do not employ enough employees to meet the threshold.
“Fair” vs. Fair Play
Although the issue of Employer Shared Responsibility is plainly addressed under the government provisions and regulations, it still doesn’t preclude folks from trying to find a way around compliance or at least to attempt a challenge at its fairness.
An article titled Bloomberg BNA: Health-Care Law Business Aggregation Rules Cause Confusion for Small Businesses, written by Sara Hansard and published by the House Committee on Small Business says business is confused about common ownership issue. In the piece, Hansard quotes Ellis Winstanley, chief executive officer of Tradelogic Corp. of Austin, Texas. He testified on behalf of the National Restaurant Association. His company owns eight restaurants as well as other businesses. But due to the structure of many restaurant companies, Winstanley asserted that like many restaurant operators, his company participates in multiple restaurant entities with various partners, often with members of the family. He went on to contend that ‘determining the employer’ is far more complex.
Each [of the companies] has less than 50 full-time equivalent employees and independently wouldn’t be required to provide health insurance under the ACA. Under the health-care law, all of the businesses must be aggregated as one large employer and health coverage must be provided. The effect of this is that the cost of doing business for each of our companies will go up.
The tests for common ownership can be simple or complex depending on each situation. It is important to speak with a benefits professional if these rules may be applicable to you. Errors of attribution could be quite costly.
The Truth as We See It
The truth as we see it: the Affordable Care Act is indeed a law whether businesses small or large are happy about this or not. Make no mistake, we certainly understand the confusion regarding the healthcare regulations. But we also understand at Bridgeport Benefits, that companies need guidance now more than ever—in light of the utter confusion—in order to create the right personalized, unique strategy for their needs. Bridgeport provides healthcare and group benefits solutions to mid-market and large employer groups. We are a trusted resource with over 20 years of proven experience and expertise to carry us into this new age of healthcare. If you need help, our sole motivation is to meet and exceed clients’ expectations by offering real world expertise and practical resources with a high touch approach. In this way we are able to maximize your existing employee benefit plans and help you steer your way through the murky waters of the Affordable Care Act.
If you any questions on any topic covered in this blog or on any healthcare related topic, please contact Bridgeport Benefits today and we will do our best to offer you the help and attention that you deserve.