What is the definition of a Small Employer under Health Care Reform?
(1) “Small employer”
(A) … any person, firm, proprietary or nonprofit corporation, partnership, public agency, or association that is actively engaged in business or service, that, on at least 50 percent of its working days during the preceding calendar quarter or preceding calendar year, employed at least one, but no more than 100, eligible employees, HR 1624 Info the majority of whom were employed within this state, that was not formed primarily for purposes of buying health benefit plans, and in which a bona fide employer-employee relationship [Common law employee * Spouses don’t count] exists.
In determining the number of eligible employees, companies that are affiliated companies and that are eligible to file a combined tax return for purposes of state taxation shall be considered one employer. Insurance Code §10753
Proofs you meet definition of Small Employer?
- DE 6 now 9 – Payroll Tax Reporting
- IRS Definition of a Business
- LLC Proofs
- No Tax Forms?
- Partnership – Proofs
- Qualification Procedures
- Sole Proprietor
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A new law requires companies to include full-time and full-time-equivalent employees when determining group size
On January 1, 2016, California state law went into effect which redefined “small employer” to include groups of up to 100 employees. The determination of employer group size must be made annually and groups must adhere to the method for counting full-time employees and full time equivalent employees outlined in Section 4980H(c)(2) of the Internal Revenue Code. The definition of large group requires the group to have a combined total of at least 101 full-time and full-time-equivalent employees.
An example of how to determine whether a company is a small group for the purpose of purchasing group coverage is provided below. The methodology considers both full-time employees and full-time-equivalent employees.
- Company Y has 40 full-time employees for each calendar month during 2015.
- Company Y also has 20 part-time employees for each calendar month during 2015, each of whom has 60 hours of service per month.
- Now, combine the hours of service of the part-time employees for a month: [20 x 60 = 1,200].
- Dividing the combined hours of service of the part-time employees by 120* equals 10 [1,200/120 = 10]. This number, 10, represents the number of Company Y’s full-time equivalent employees for each month during 2015.
- Company Y adds up the total number of full-time employees for each calendar month of 2015, which is 480 [40 x 12 = 480].
- Company Y adds up the total number of full-time equivalent employees for each calendar month of 2015, which is 120 [10 x 12 = 120].
- Company Y adds those two numbers together and divides the total by 12, which equals 50 [(480 + 120 = 600)/12 = 50].
In this example company Y meets the size criteria for a small group because the total number of full-time and full-time equivalent employees for at least 50 percent of the preceding calendar year equals 50. Groups must consider additional IRS rules in making their final determination of whether the group is large or small, and some exceptions may apply.
On the Master Group Application for Small Business be sure to fill in Section 2, #8f. (In the scenario above, the number to fill in is 50 FTE and FTE Equivalent.) See the highlighted areas of section 2, page 2 of the application below.
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* The number of 120 is stipulated by Internal Revenue Code 4980H(c)(2): “. . . in addition to the number of full-time employees for any month otherwise determined, include for such month a number of full-time employees determined by dividing the aggregate number of hours of service of employees who are not full-time employees for the month by 120”.
ORIGINAL…. 18) Permits a self-employed individual with specified income to, at his or her discretion, enroll in the Exchange as an individual rather than a small employer. [This is the 1st of 18 or so bill analysis posted on http://leginfo.legislature.ca.gov ]
Amendment to 10700 w —- (3) On or after January 1, 2014, a self-employed individual who obtains at least 50 percent of annual income from self-employment as demonstrated through personal income tax filings for the current or prior year. To the extent permitted under the federal Patient Protection and Affordable Care Act (Public Law 111-148) and any rules or guidance issued consistent with that law, a self-employed individual whose modified annual gross income is anticipated to be less than 400 percent of the federal poverty level may at his or her discretion seek to enroll as an individual rather than a small employer through the California Health Benefit Exchange.
Child & Related Pages
AB 1672 – (1992 to 2013) Small Group Health Rules prior to Obamacare
Health Insurance Deduction Line 29 for self employed
Schedule C – Line 12 Biz Income or Loss, Line 29 Health Insurance Premiums, Line 37 Adjusted Gross Income, MAGI Income
- EmployEE Definition
- Bonifide Employer-Employee Relationship – non spousal
- Dependent Definition – Up to Age 26
- ACA Rates 2018 Final Rule Dependent Child
- Add Newborn
- Children under 19
- Disabled Children – over 26
- Registered Domestic Partners – Spousal Health Coverage?
- HR 1624 Federal Repeal 51 to 100 Definition
Here’s what they were under AB 1672 – 1992 – 2014
- AB 1672 Small Group Guaranteed Issue Health Insurance – Proof in Business Requirements
More on definition
This subparagraph shall be implemented to the extent consistent with PPACA, except that the minimum requirement of one employee shall be implemented only to the extent required by PPACA.
(2) For plan years commencing on or after January 1, 2014, the definition of an employer, for purposes of determining whether an employer with one employee shall include sole proprietors, certain owners of “S” corporations, or other individuals, shall be consistent with Section 1304 of PPACA.
The term “small employer” means, in connection with a group health plan with respect to a calendar year and a plan year, an employer who employed an average of at least 1 but not more than 100 employees on business days during the preceding calendar year and who employs at least 1 employee on the first day of the plan year.] [42.usc.18024.b 2 def.employER (1304
The definition of Small Employer no longer includes self employed, Partners, Sole Proprietors & S Corps unless there is at least one common law employee. Since everything will be guaranteed issue for 1.1.2014 it’s OK as the one man shop or husband & wife group can get coverage as individuals regardless of health status. It should also be a tax write off. If the business isn’t making that much $$$ there are Tax Subsidies. Health Care Reform — Non Grandfathered Plans * AB 1083 * Insurance Code §10753