Owning a business is one thing, but owning a business that has multiple companies can be a daunting endeavor for any seasoned commercial expert. If you do own a chain of businesses, it’s important to know exactly what “controlled group health insurance is,” how it can benefit you, and what it may do to improve your overall employee benefits package.
Health insurance is imperative to any employee benefits package plan and tends to be rated among the most beneficial of all employee benefits, being the most highly sought after and the most appealing from the perspective of your workers.
In this article, we’ll go over what a controlled group is, its impact on your health insurance plan, and how to ensure all your business employees get the best possible benefits available.
Before we get into controlled group health insurance, it’s important to look at what the definition of “controlled group” even is. In this context, a controlled group is two or more companies that may be deemed as a single employer, for tax purposes. As such, all of these companies are viewed as a single entity for the purpose of determining the employer’s obligation for providing certain employee benefits, including group health insurance.
Controlled groups can be further divided into multiple different types, including brother-sister controlled groups, combined controller groups, and parent-subsidiary controlled groups. Each group type has its own specific regulations and rules which help to determine whether companies are considered a part of a controlled group.
According to the ACA, or Affordable Care Act, any employer that has 50 or more full-time equivalent employees is required to provide affordable, minimum-value coverage. If they do not, they could be potentially subject to penalties. With the ACA, controlled group rules still apply.
So, if you owned a business with multiple companies, say Company A had only 25 full-time equivalent employees. But, because Company B shares common ownership with Company A, and Company B has 200 full-time employees, then Company A would still be subject to the ACA employer mandate.
There are additional regulations and rules with which a controlled group needs to comply with, but we’ll focus on how they apply to group health and employee benefits in this article. The key takeaway here is that the mandates will apply to the business as a whole – not separately for each individual company since they all have common ownership.
Small businesses may find it more challenging with controlled groups to offer health insurance benefits to a much larger number of employees than they may ordinarily be required to cover. This results in higher expenses overall for the business owner, plus for the employees who need to pay for a portion of their own health insurance.
Of course, the impacts of controlled groups on health insurance tend to vary based on the kind of controlled group/the size of the companies involved. If your company is part of a parent-subsidiary controlled group, then the parent company is obligated to include all of its subsidiary companies when gauging meeting regulations for providing employee benefits.
Having your company be part of a controlled group means you may need to familiarize yourself with the regulations/obligations surrounding employee benefits and ensure that you’re adequately complying to secure your workers and guarantee that they receive their much-deserved benefits. In this case, it isn’t too bad of an idea to seek out the aid of an insurance agent or an attorney that offers additional, deeper insights into employee benefits regulations and laws for your state or industry.
To save costs, you may consider offering a “self-insured” health plan, where you can provide health insurance benefits to your respective employees without being required to comply with controlled group rules. This is especially integral for small businesses, as it reduces the requirement for any insurance premiums and significantly lowers the costs that businesses face when offering employee benefits packages to their workers.
Another option is to seek out a waiver from the controlled group rules. This can be done if specific conditions are met, and it is used to reduce the number of employees that are required to be covered by the health insurance plan, thereby reducing costs associated overall.
Yes, controlled group health insurance can end up being a difficult, and sometimes costly issue for business owners, but if you’re a business owner of multiple companies, it’s important to understand what kind of impact this can end up having on your employee benefits. Work with an insurance agent to determine how best you can get your employees the benefits that they deserve and ensure that your business and companies can remain compliant with regulations, state law, and industry laws.