As a small business owner, you may wonder if you are required by law to provide healthcare insurance to your employees. No business is legally required to offer health insurance, but the Affordable Care Act does include a mandate that states that some large employers have to offer either qualified healthcare benefits or pay a tax penalty. If you are a small business then there is a good chance that you do not fall into this category but it is a good idea to be certain.
You need to know if you are considered a large employer by the IRS. If so, then you are required to meet this mandate. If you have fewer than 50 employees then you are not considered to be a large employer. As a smaller employer, you are not required by law to offer healthcare coverage, although some smaller businesses do offer some sort of healthcare incentive to make employment a bit more attractive.
An applicable large employer is one that employs an average of 50 or more full time equivalent employees. Large employers are defined on a calendar year basis so even if you are not considered a large employer now, you may be considered one in the future so it is a good idea to know how to calculate this. Your business is not considered a large employer if you employed more than 50 employees full time but for no more than 120 calendar days during the year previous. So for instance, if your company hires more employees during specific seasons, but you do not keep at least 50 employees for more than four months out of the year, then you are not considered a large employer and are not subject to the penalty.
Note that full time employees are those that work an average of at least 30 hours per week in any given month. When factoring your full time employees, you must keep this in mind. If you have 49 employees who work 40 hour weeks and one that works a 30 hour week then you are considered a large employer by the IRS.
It is relatively easy to determine if you need to offer healthcare coverage to your employees. If you are still unsure, you can contact the IRS or the healthcare marketplace to learn more about what constitutes large employers and what you need to do if you do in fact fall in to this category.