Growing past 50 employees: what changes for health insurance
Crossing 50 changes how a group is rated, whether the employer mandate applies, and what must be reported. The first decision to make is how you count.
Four things that change when a group grows past 50.
Some move at the next renewal. Others start with the calendar year after you cross.
Pricing Moves Toward Your Own Claims
Small group pricing is built from age, area and tobacco. Past the line, a renewal can reflect your own claims. A healthy group may do better, and a group with a few large claims may not.
The Employer Mandate May Begin
An employer with 50 or more full-time employees, counting full-time equivalents, must offer affordable, adequate coverage to full-time employees or risk a penalty.
New Reporting Starts
Employers subject to the mandate report coverage offers to the IRS and furnish statements to employees. Systems and hours tracking need to be ready before the year starts.
More Funding Options Open Up
Larger groups can look at level-funded and self-funded arrangements, which price on the group’s own experience.
What the rules say.
Two definitions, one federal and one Michigan, decide which side of the line you are on.
50 Full-Time Equivalents Is the Federal Line
An applicable large employer averages at least 50 full-time employees, including full-time equivalents, during the prior calendar year. See 26 U.S.C. 4980H.
Full-Time Means 30 Hours a Week
A full-time employee averages at least 30 hours of service per week, or 130 hours in a month. See 26 U.S.C. 4980H(c)(4).
Michigan’s Small Employer Is 1 to 50
Beginning January 1, 2018, Michigan defines a small employer as one that averaged at least 1 and no more than 50 full-time employees during the preceding calendar year and employs at least 1 employee on the first day of the plan year. Affiliated employers count as one. See MCL 500.3701.
Sources: 26 U.S.C. 4980H · MCL 500.3701
We look at the line before you cross it.
We model the next renewal on both sides of 50, check your hours data, and tell you what the mandate and the reporting will take.
Related pages.
Sitting Right at 50
What to do when your count is close to the line.
Employer Shared Responsibility
What the mandate requires and who it applies to.
Small Group vs Large Group
The full comparison, side by side.
Questions that come up.
Short answers to the questions we hear most. Each links to the full page.
What happens if my business grows past 50 employees?
Pricing can start to reflect your own claims, the employer mandate may begin, and reporting starts. Check your count first, since the federal test uses full-time equivalents averaged over the prior year.
Do I count part-timers?
Yes, in part. Hours worked by part-time employees are converted into full-time equivalents for the federal test. The compliance checker walks through the count.
When does the mandate start applying?
It is based on the prior calendar year’s average, so a group that crosses 50 in one year is generally tested on that year for the next.
Ready? Send us your renewal, or talk it through with someone first. No cost, no obligation.
General information, not legal or tax advice. Plan-specific questions belong with the plan documents, the carrier and counsel.
Send us your renewal.
We’ll tell you whether it looks competitive, where we see opportunity, and the five questions we’d put to your carrier. No cost, and no obligation to move anything.
The renewal letter
Your current plan summary
Contribution split by tier
Enrolled counts by tier
Four documents, two more if your group is 50 or more. Nothing else; every extra one is a reason to postpone.
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