If you’re an employer, you must offer insurance to full time employees and report this effort to the IRS. You probably must report if you are in any of the following categories.
Your company self insures. Note that there is no minimum requirement of fifty employees, you must participate and file reports no matter how many employees you have.
Your company has fifty or more full time equivalent (FTE) employees. There are some exclusions from this rule. A company owner and his stockholders are not counted. Employees who are receiving TriCare or VA benefits are not counted. This is something that must be determined on a case-by-case basis. See my previous blog entry for more information. Getting Started With the Affordable Care Act
Any companies with common ownership, with more than fifty FTE employees combined. There are many entrepreneurs who will fall into this category, but do investigate the Employer Aggregation Rules in detail at the link below. If you have a few small companies with a couple dozen employees each, but they all report using the same FEIN, and if the aggregate total of all of those employees is fifty or more, you must offer insurance and you must report. Maybe. There is no pat answer, each situation will need to be evaluated.
If you have seasonal workers you may not need to report, but the formulas are different in this situation and we can help you check.
If you are a government agency or a non-profit you still must report if you fit the criteria to qualify as an ALE. Your agency or organization is not exempt from the ACA.
If you fill any of the above requirements, congratulations! You are now regarded as an Applicable Large Employer (ALE) for 2016.
More cool information is on the IRS website here: IRS Affordable Care Act website
Maybe you won’t need to report if you’re starting a new business, but perhaps you will. The new business that launches in 2016 will be an ALE if “it reasonably expects to employ, and actually does employ, an average of at least 50 full-time employees (including full-time equivalent employees) on business days during the current calendar year.”
Hold your business plan up to a bright light. If you told the bankers you’re starting off with ten core employees, but expect to employ 75 within six months, you’re going to have a hard time shrugging your shoulders and saying, “I didn’t know we’d grow so fast” to the IRS.
If you “reasonably expect” to have thirty employees at most the first year, but business booms as the year goes on and you cross the fifty threshold in December 2016, chances are you’ll be OK. Get ramped up to report in 2017. Nobody knows where the IRS will draw the line, so compliance should be your first instinct.
You can read more at the Passport Software blog. Passport ACA website