Growing past 50 brings two federal rules into play. Neither switches on the day you hire employee number 50, so it pays to see them coming.
Health coverage for large employers
If you average at least 50 full-time employees, including full-time equivalents, over a year, you are an applicable large employer for the next year. From then on:
- The federal employer shared responsibility rules on health coverage apply to you.
- Each year you file Forms 1094-C and 1095-C with the IRS about the coverage you offer your full-time employees.
To count, see do I have to offer health insurance.
Family and medical leave
The federal Family and Medical Leave Act covers private employers with 50 or more employees in 20 or more workweeks in the current or previous calendar year. It counts employees in its own way, so track it separately.
Rules that start before 50
- Federal COBRA generally applies once you had 20 or more employees in the prior year.
- Some states have continuation rules for smaller employers, such as California, Texas and Florida.
- State paid sick leave rules can apply at any size. Washington and Arizona are two examples.
Getting ready
- Track every employee’s hours each month, starting now.
- Note which months you are busiest, since the test uses a yearly average.
- Talk to an advisor a year before you expect to cross the line, not after.
Questions to bring to your advisor
- In which year would we become an applicable large employer?
- What would we need to offer, and to whom?
- Who will prepare our Forms 1094-C and 1095-C?
- When does family and medical leave start to apply to us?
