What is a “Small Employer” Under the Health Care Reform Bill?
People often ask me for the definition of a Small Employer under the recently enacted health care reform bill. Well, actually, to be honest, no-one has; but if they did, I am happy to report I could clear any murkiness right up!
As I understand it, under the health care bill, a Small Employer is one that has employed an average of 1-100 employees over the previous plan year and employs at least one person on the first day of the plan year* while a Large Employer would be 101+ employees. The Small Employer classification should not be confused with a Qualified Small Employer, an entity that may apply for tax credit if employing less than 25 full-time equivalents and meeting some other requirements I won’t bore you with. And to further allay any confusion, starting in 2016, states can choose to define Small Employer as 1-50 employees, and a Large Employer as 51+. Also, I should mention that some people are making the silly mistake of failing to distinguish between large employer and Large Employer. Certain provisions, such as auto-enrollment, will only affect (lower case) large employers with 200+ employees while not touching Large Employers in the 101-199 category.
All clear now? I am glad I was able to shed light on this issue.
Tomorrow: Calculating FTE (full-time equivalents) for your tax credit. Warning: requires advanced math.
P.s. Please remember, while I have attempted to convey this information in a factual way, I am not an attorney and there are good reasons why I don’t play one on TV. Please consult SHRM, your broker, or counsel about any real, actual questions about health care reform implications.
*Why it is necessary to spell out that you employ at least one person, I don’t know.