Question: I know that ObamaCare’s Employer Mandate requires employers with 50 or more employees to offer health coverage to their full-time employees starting on January 1, 2016. My wife and I own two different LLCs – my interior design business and her plumbing company. The interior design business has 15 employees and the plumbing company has 38 employees. Because both companies are under 50, we don’t have to worry about the Employer Mandate, do we?
Answer: YES YOU DO. Under the ACA, companies that have common ownership or are otherwise closely related are aggregated for the purposes of determining whether or not they employ at least 50 full-time employees. This “aggregation rule” in the ACA piggybacks on two established tests codified in Section 414 of the Internal Revenue Code dealing with “controlled groups” and “affiliated service groups.” If two or more companies meet the “controlled group” test or the “affiliated service group” test and the combined total of employees meets the 50 employee threshold, then each separate company is subject to the Employer Mandate even if the separate companies do not individually have enough employees to meet the threshold. Because your two companies are commonly owned by you and your wife and because both companies combined employ a total of 53 employees, each company is subject to the Employer Mandate.
Q&A on the Affordable Care Act (“ObamaCare”) by Matt Lapointe, Esq. Stay tuned for the second installment next week and be sure to leave your ObamaCare questions below, we will answer them weekly in the order received.