It’s only natural that growing, healthy companies and organizations need to hire additional employees. If you’re approaching 50 or more employees, however, it’s important to understand what that means and what to do when your company hits 50 employees. For one thing, you’ll need to reassess your health plan options. The Affordable Care Act (ACA) doesn’t require employers to provide health insurance, but you may face a penalty for not doing so as a large employer.
You also need to consider your marketplace. As your workforce scales past 50, 100, 250, etc. more and more strategies and services become available to you and to your employees.
Understanding your options and implementing the right ones can help you compete for talent in a tight labor market and reinvest preserved spend into other initiatives.
Strategies and services available to you can include:
- Collective purchasing solutions where you can join other companies to acquire coverage for a reduced cost by leveraging thousands of employees. This can save your employees thousands of dollars per year for the same coverage they have enjoyed.
- Increased levels of guaranteed coverage for life and disability insurance and benefit programs to help protect certain employee classes.
- More sophisticated employee communication and decision support tools to help ensure understanding and awareness.
- Personal and concierge level benefit and healthcare counseling, education, and support services to provide extra support to employees and their families.
- More automation, insurtech, and integration with insurance carriers to reduce manual workflow in HR, Finance, etc. and allow your teams to focus on strategic initiatives and other higher-level priorities.
When Businesses are Considered Large Employers
Any company that averages 50 or more employees that are full-time equivalents (FTEs) falls under large employer status. If this is the case for a full calendar year, you’ll be officially considered a large employer the following year. The question is, how can you calculate whether your business averages 50 or more FTE employees? For each month of the previous calendar year, do the following:- Count how many employees worked 120+ hours over the course of the month. These workers are considered “full-time.”
- Count the hours worked by non-full-time workers, including part-time and seasonal employees. Divide this number by 120 and round fractions to the nearest hundredth. This is the number of “full-time equivalents” at your organization.
- Combine the number of full-time employees and full-time equivalents for each month and calculate a final sum for the full calendar year. Dividing this number by 12 will give you the average number of employees at your business.
The Affordable Care Act’s “Play or Pay” Mandate
As a large employer, you’ll need to comply with the Affordable Care Act’s “Play or Pay” mandate. This essentially means you’ll need to offer affordable health care plans or face penalties enacted by the IRS. A full-time employee’s purchase of health insurance through the Marketplace triggers this penalty. To avoid it, you’ll have to offer health benefits to all employees working 30 hours or more per week. Coverage needs to be considered affordable under the ACA, and the plan needs to cover at least 60% of the total cost of benefits.ACA Reporting
Large employers are required to complete a 1095-C form for every full-time worker at their business. You must give each worker a copy of the form. Additionally, it’s necessary to submit copies of your 1094-C and 1095-C forms to the IRS for the prior calendar year. As you can imagine, these tax forms are complex and demand careful examination. Experienced vendors can assist you and ensure you complete the process correctly.Switching from Small to Large Group Health Plans
Let’s say you’re officially considered a large employer with 50 or more employees this year. Next September, your health plan renewal would be a large group renewal process. The following are some additional things to be aware of:- Your rating will transition from member-level rates to composite rates.
- Unlike small group plans, large group plans are underwritten. To receive a quote, the completion of a group risk questionnaire is typically required.
- Pediatric dental and vision are not included for large group health plans.
- Pharmaceutical medications and plan options are usually different for large-group health plans (even with the same health insurance carrier).
The Family Medical Leave Act (FMLA)
The FMLA requires businesses to offer unpaid leave for reasons related to health care or family needs. Employers with 50 or more employees in 20+ work weeks in either the current or previous calendar year are covered under the FMLA. As a covered employer, you must:- Give employees any mandatory FMLA notices
- Provide leave under the provisions of the FMLA
- Ensure that health benefits are maintained during a worker’s leave period
- Ensuring each worker returns to the same position or an equivalent position after the leave period has ended
- Maintaining a record of FMLA documents on behalf of your employees
