Who is an Employer under Health Care Reform?

Employers with 50 or more full-time equivalent employees must comply with the mandate to offer affordable health insurance to its full-time employees beginning in 2014. (Delayed to 2015 by President Obama in July 2013.)

Full-time is defined as 30 hours per week, 52 weeks per year, or 1,560 hours of wages paid in a year’s time.

A simple calculation to see if an employer must comply is to multiply the 1,560 hours times 50, which equals 78,000 hours of wages paid in a year’s time. If an employer is paying that many hours or more, they have achieved 50 full-time equivalent positions in a year. The Affordable Care Act has its own calculations that are slightly different to accommodate partial years and quarters of employment, but this is essentially the concept. And if an employer comes under the Act’s mandate to provide affordable health insurance, it must be offered to all employees who work 30 hours a week or more.

The Affordable Care Act defines an “Employer” to be a company or a group of companies under “Common Control”. Common control is defined as the same five or fewer people owning at least 80 percent of the companies. This common control is further complicated by the rules of attribution with “constructive” stock ownership. An individual can be considered owning the stock of his or her spouse or children, grandchildren or parents. This can get complicated when multiple generations of a family are involved in their respective business ventures. This also means that an employer can not separate a company into multiple entities to prevent having 50 full-time equivalent employees, unless those new, separate entities no longer fit under the definition of common control.

UPDATE SEPTEMBER 18, 2013 AS A RESULT OF IRS RULING ON SAME SEX MARRIED COUPLES:
Under the rules of “Common Control”: what one spouse owns, the other also owns. Therefore, if each partner of a couple in a marriage owns a business, the employees of both businesses are counted as one business for purposes of the 50 full time equivalent calculations.