The employer mandate requires companies with 50 or more full-time employees, including full-time equivalents (FTEs), to offer affordable, minimum value coverage to their employees or pay an excise tax. However, it’s possible that a company with fewer than 50 employees could also be subject to the employer mandate if it’s part of an aggregated employer group with 50 or more 50 total FTEs.
What this means is that, if you own more than one company, you’d need to add the employees of all of the different businesses together to see if you hit the 50 mark. If so, then each of the companies, even if they have fewer than 50 employees, would be required to offer health insurance.
But common ownership is rarely easy to figure out because, often times, people don’t own 100% of all of the companies. You might own 100% of a sole proprietorship and be a 50/50 partner in another business. Or perhaps you have a minority share in an LLC and your spouse owns his or her own business. When you consider different business formats and different ownership percentages, it gets confusing very quickly.
Because everyone’s situation is different, we can’t provide some easy rule to determine common ownership; it’s probably best for you to talk with a tax attorney. What we can do is tell you where the rules are in case you’d like to take a look. The common ownership, or aggregation, rules are found in Section 414 of the tax code. Specifically, you’ll want to look at subsections (b), (c), (m), and (o). If, based on what the code says, your company is under common ownership, you will need to add your employees together when determining if you are an applicable large employer, and if so then each of the member companies are called applicable large employer members.