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common ownership business

Group Health Insurance for Common Ownership Businesses

According to the ACA, companies with 50 or more full-time employees must provide minimum essential health coverage. 

Companies with common ownership are treated as a single employer. The branches or franchises are combined into one entity, meaning all workers are represented by one business instead of multiple. By law, these companies are combined to determine whether they employ at least 50 full-time employees.

If the total meets the threshold of 50 full-time employees, then each individual company is seen as an applicable large employer. If the consolidated total meets the threshold for mandatory health coverage, each individual company has to adhere to the shared responsibility stipulations. Basically, even businesses that separately do not employ 50 or more workers will have to provide health coverage to their employees or each franchise will be subject to a fine

Controlled groups

If a business is commonly owned by more than one entity, it is essential to determine whether it is part of a controlled group. Companies that are a part of a controlled group must provide MEC to full-time employees. There are three differentiation, according to the IRS:

  1. Parent-subsidiary: When one or more companies are connected through stock ownership with a common parent corporation. Eighty percent of each company’s stock is owned by one or more of the corporations in the group, and the common parent company owns 80 percent of at least one other company.
  2. Brother-sister: Two or more companies with five or fewer common owners who directly or indirectly own a controlling interest – at least 80 percent of each company – of each group and have effective control – more than 50 percent of the stock of each company.
  3. Combined group: Three or more corporations, each of which is a member of a group of corporations, including parent-subsidiary or brother-sister group.

Determining whether a company is part of a controlled group can be tricky. Human resources should consult a legal, tax, or benefits consul.

Group Health Insurance

If the business is located in different states, a question that comes into play is which state the policy should be taken out in. It would be best if you bought the policy in the state where your headquarters is located or where the majority of your employees live. The best advice we give our clients who branch out to another state or who have multiple locations is to look at your current plan to see if it covers across states. If it doesn’t, the best thing to do is open a new group health insurance policy that can cover all your employees. 

Cosmo Insurance Agency specializies in helping businesses find affordable and customized employee benefits. 

Cosmo Insurance Agency is a full-service independent insurance agency based in Hackensack (Bergen County) and Lakewood (Ocean County), New Jersey that offers an all-encompassing range of insurance options for both individuals and businesses. Cosmo keeps its promise to assure an efficient and creative approach to the services we offer. Each of our clients experience a personalized and long-term relationship with us. Our New Jersey based team of health brokers guides our clients in helping them choose the most cost-effective options. By incorporating our knowledge of the insurance guidelines for healthcare, employee benefits, life insurance, self-insurance, dental, disability, and long term care insurance, we keep our clients up-to-date with affordable plans that cover all their specific insurance needs.