What is the definition of a Small Employer under Health Care Reform?
(1) “Small employer”
(A) … any person, firm, proprietary or nonprofit corporation, partnership, public agency, or association that is actively engaged in business or service, that, on at least 50 percent of its working days during the preceding calendar quarter or preceding calendar year, employed at least one, but no more than 100, eligible employees, HR 1624 Info the majority of whom were employed within this state, that was not formed primarily for purposes of buying health benefit plans, and in which a bona fide employer-employee relationship [Common law employee * Spouses don’t count] exists.
In determining the number of eligible employees, companies that are affiliated companies and that are eligible to file a combined tax return for purposes of state taxation shall be considered one employer. Insurance Code §10753
See rule and SB 1375 about the prohibition of Association Group Plans
Self Employed?
Self employed owners of a small business must have at least one non spousal, w-2 employee to qualify as a group.
If you do have a non spousal employee on payroll, click here to get an Individual & Family quote. Under ACA/Obamacare your coverage is STILL guaranteed issue with no pre-existing condition clause.
If your business isn’t as profitable as you’d like it to be, you can qualify for subsidies under Obamacare, it’s a function of MAGI – Modified Adjusted Gross Income, Line 37 on your 1040 tax return.
The premiums for self employed are still deductible, line 29 of your 1040, learn more, whether you have an Individual Plan or a Group Health Premiums under Section §106 IRC. As long as the plan is for employees and if you have them, you’ll have to cover them to get the tax deduction.
US News & World Report 11.28.2014 on advantages for self employed under Health Care Reform – Note though that in CA under AB 1672 – Self Employed could always get coverage!.
Tax Advantages
- Schedule C – Line 12 Biz Income or Loss,
- Tax Credits Small Business §45 R
See our other pages on Employer – Employee Definition
What is a #bona fide employer – employee relationship?
Health Care Reform requires that one have a bona fide employer – employee relationship at common law, not husband & wife. Even if you had a group plan prior to ACA.
What is that? Why?
Legal Reasoning
I’ll grant, that I have trouble completely following the logic given to me by Covered CA, but I have to acknowledge that every Insurance Company agrees.
only a small employer new definition of Small Employer §10753 (q) (1) may participate in the SHOP. 45 CFR 155.710:
“Small employer” and “employer” are defined with reference to Section 2791 [300gg-91] of the Public Health Service Act.
Employer has the meaning given to the term in section 2791 of the PHS Act, except that such term includes employers with one or more employees. All persons treated as a single employer under subsection (b), (c), (m), or (o) of section 414 of the Code are treated as one employer. CFR § 155.20.
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Under Section 2791, “employer” is defined by reference to ERISA Section 3(5). [29 US Code §1002 Definitions]
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ERISA Section 3(5) requires that an employer employ at least one common law employee (i.e. someone other than the owner).
Worker Classification 20 Factors
Ascende Human Capital Consulting
Our Website on Employee vs 1099 Independent Contractor
Under 29 C.F.R. 2510.3-3(c), a regulation adopted under ERISA, an employee does not include a sole proprietor or the sole proprietor’s spouse, or a partner in a partnership or the partner’s spouse. See also 77 Fed. Reg. 18399 (Mar. 27, 2012). (legal reasoning courtesy of Covered CA Facebook inquiry) SHOP Agent Guidelines
How many common law employees must be enrolled for coverage to be considered group coverage?
A. For a group health plan to be considered a “group health plan” under the Employee Retirement Income Security Act (ERISA), there must be at least one common law employee enrolled. Pursuant to 29 C.F.R. 2510.2-3(b), an “employee benefit plan” does not exist if no “employees” are covered by the plan. Pursuant to 29 C.F.R. 2510.3-1 and 29 C.F.R. 2590.732(d) an “employee” does not include the sole owner of a business or a spouse of the business owner. New York.gov
See our other pages on Employer – Employee Definition
EmployER Definition – Health Care Reform
- EmployEE Definition
- Bona Fide Employer-Employee Relationship – non spousal
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If you’re self-employed with no employees, you’re not considered an employer. You can use the individual Marketplace to find coverage that fits your needs.
C Corp separate legal entity owned by shareholders
S Corp – Does not pay Federal Income Tax
Blue Shield Flyer Small businesses and the ACA Rev 3.2013 Michael Lujan was very explicit in 2 presentations to CAHU and LAAHU, an EE is someone who is listed on a DE9C. Sole Proprietors and partners are normally not on a DE9C. The sole prop and partner can be included in a group plan IF they have at least one W2 EE listed on the DE9C.
Resources & Links
Keller Benefits.com
(b) Generally the relationship of employer and employee exists when the person for whom services are performed has the right to control and direct the individual who performs the services, not only as to the result to be accomplished by the work but also as to the details and means by which that result is accomplished. That is, an employee is subject to the will and control of the employer not only as to what shall be done but how it shall be done. In this connection, it is not necessary that the employer actually direct or control the manner in which the services are performed; it is sufficient if he has the right to do so. The right to discharge is also an important factor indicating that the person possessing that right is an employer. Other factors characteristic of an employer, but not necessarily present in every case, are the furnishing of tools and the furnishing of a place to work to the individual who performs the services. In general, if an individual is subject to the control or direction of another merely as to the result to be accomplished by the work and not as to the means and methods for accomplishing the result, he is not an employee.
See our webpage on Employee vs 1099 Contractor
Health Coverage Guide.org 
- What Is Group Coverage?
- Is Insurance Required?
- Is Your Business Eligible for Group Coverage?
- Who Is Eligible for Coverage?
- What Do Employers Have to Pay?
Art Gallagher Health Care Reform FAQ's
Compliance #Assistance Guide from DOL.Gov Health Benefits under Federal Law
Health Care Reform Explained
Kaiser Foundation Cartoon VIDEO
IRS Publication 334
Tax Guide for Small Business
Insurance Deduction is on Page 34 of 2019 edition
CA Tax Guide for Business Owners
IRS Small Business Self-Employed Tax Center VIDEO
How to fill out a Schedule C Profit or Loss from Business VIDEO
Business Deduction
Meals & Entertainment VIDEO
Our webpages on
Tax Credits Small Business §45 R
- IRC §106 Health Insurance Deduction for Employers & Employees
- Section §105 -HRA Health Reimbursement
- Section 125 – POP Plan Employee Contributions are Tax Deductible
Steve Shorr
Website Video #Introduction
Our webpages on our qualifications, reviews, testimonials, etc.
Our Webpage on Insurance Coverage for
COVID 19
United Health Care - Get a quote
Insubuy Travel Health Insurance
Instant Quotes, Details and ONLINE Enrollment
Broker ONLY
WP Carrier 411
A new law requires companies to include full-time and full-time-equivalent employees when determining group size
On January 1, 2016, California state law went into effect which redefined “small employer” to include groups of up to 100 employees. The determination of employer group size must be made annually and groups must adhere to the method for counting full-time employees and full time equivalent employees outlined in Section 4980H(c)(2) of the Internal Revenue Code. The definition of large group requires the group to have a combined total of at least 101 full-time and full-time-equivalent employees.
An example of how to determine whether a company is a small group for the purpose of purchasing group coverage is provided below. The methodology considers both full-time employees and full-time-equivalent employees.
- Company Y has 40 full-time employees for each calendar month during 2015.
- Company Y also has 20 part-time employees for each calendar month during 2015, each of whom has 60 hours of service per month.
- Now, combine the hours of service of the part-time employees for a month: [20 x 60 = 1,200].
- Dividing the combined hours of service of the part-time employees by 120* equals 10 [1,200/120 = 10]. This number, 10, represents the number of Company Y’s full-time equivalent employees for each month during 2015.
- Company Y adds up the total number of full-time employees for each calendar month of 2015, which is 480 [40 x 12 = 480].
- Company Y adds up the total number of full-time equivalent employees for each calendar month of 2015, which is 120 [10 x 12 = 120].
- Company Y adds those two numbers together and divides the total by 12, which equals 50 [(480 + 120 = 600)/12 = 50].
In this example company Y meets the size criteria for a small group because the total number of full-time and full-time equivalent employees for at least 50 percent of the preceding calendar year equals 50. Groups must consider additional IRS rules in making their final determination of whether the group is large or small, and some exceptions may apply.
On the Master Group Application for Small Business be sure to fill in Section 2, #8f. (In the scenario above, the number to fill in is 50 FTE and FTE Equivalent.) See the highlighted areas of section 2, page 2 of the application below.
We’re here to answer any questions you may have. Please call Producer Services at (if you have any questions.
* The number of 120 is stipulated by Internal Revenue Code 4980H(c)(2): “. . . in addition to the number of full-time employees for any month otherwise determined, include for such month a number of full-time employees determined by dividing the aggregate number of hours of service of employees who are not full-time employees for the month by 120”.
anchor 10753g
Technical Stuff
AB 1083 Bill Analysis 6.27.2011.senate 5.3.2011
Item # 5 in 8.30.2012 bill analysis ends choice for self employed to go into exchange as a group.
ORIGINAL…. 18) Permits a self-employed individual with specified income to, at his or her discretion, enroll in the Exchange as an individual rather than a small employer. [This is the 1st of 18 or so bill analysis posted on http://leginfo.legislature.ca.gov ]
Amendment to 10700 w —- (3) On or after January 1, 2014, a self-employed individual who obtains at least 50 percent of annual income from self-employment as demonstrated through personal income tax filings for the current or prior year. To the extent permitted under the federal Patient Protection and Affordable Care Act (Public Law 111-148) and any rules or guidance issued consistent with that law, a self-employed individual whose modified annual gross income is anticipated to be less than 400 percent of the federal poverty level may at his or her discretion seek to enroll as an individual rather than a small employer through the California Health Benefit Exchange.
Child & Related Pages
AB 1672 – (1992 to 2013) Small Group Health Rules prior to Obamacare
Health Insurance Deduction Line 29 for self employed
Schedule C – Line 12 Biz Income or Loss, Line 29 Health Insurance Premiums, Line 37 Adjusted Gross Income, MAGI Income
Self Employed Deduction for S Corp Owners
Details on Obamacare Subsidy and Line 29 deduction
Self Employed – New Definition under Health Care Reform – Introduction
Here’s what they were under AB 1672 – 1992 – 2014
More on definition
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This subparagraph shall be implemented to the extent consistent with PPACA, except that the minimum requirement of one employee shall be implemented only to the extent required by PPACA.
(2) For plan years commencing on or after January 1, 2014, the definition of an employer, for purposes of determining whether an employer with one employee shall include sole proprietors, certain owners of “S” corporations, or other individuals, shall be consistent with Section 1304 of PPACA.
The term “small employer” means, in connection with a group health plan with respect to a calendar year and a plan year, an employer who employed an average of at least 1 but not more than 100 employees on business days during the preceding calendar year and who employs at least 1 employee on the first day of the plan year.] [42.usc.18024.b 2 def.employER (1304
The definition of Small Employer no longer includes self employed, Partners, Sole Proprietors & S Corps unless there is at least one common law employee. Since everything will be guaranteed issue for 1.1.2014 it’s OK as the one man shop or husband & wife group can get coverage as individuals regardless of health status. It should also be a tax write off. If the business isn’t making that much $$$ there are Tax Subsidies. Health Care Reform — Non Grandfathered Plans * AB 1083 * Insurance Code §10753
HR 1624
51 to 100 yes or no?
§10753 (q) (1) “Small employer” Health Care Reform — Non Grandfathered Plans AB 1083 means either of the following:
NOPE – See HR 1624 Below!!! However, CA could do it on their own
For plan years commencing on or after January 1, 2016, any person, firm, proprietary or nonprofit corporation, partnership, public agency, or association that is actively engaged in business or service, that, on at least 50 percent of its working days during the preceding calendar quarter or preceding calendar year, employed at least one, but no more than 100, eligible employees,
[Blue Cross FAQ’s 4.14.2015] There might be large premium increases as these groups go into the Small Group Market – where rating factors are limited and may lose large group purchasing power, discounts and group’s experience. Blue Shield Bulletin 7.9.2015 Click here for our Excel census form for your FREE Quote in CA or enter it ONLINE.
Blue Shield FAQ’s
[Some companies say one employee who could waive off if they have other group coverage and others say a common law employee MUST enroll. Email us [email protected] for a specific answer in your situation. See Participation Requirements]
Legislation might be coming to change this CA Healthline 9.21.2015
HR 1624 just passed – President Obama just signed it CA Healthline 10.8.2015 Background CA Health Line 9.21.2015
SB 125 – CA adopts FT/FTE method to determine small group eligibility, same as ACA
Kaiser 10.8.2015 Agent Bulletin, CAHU and CA Healthline 10.20.2015 Health Net says definition already set in CA under AB 1083 and they are going ahead with the transition of 51 to 100 to Small Group.
My wife and I own an S Corp. So, since we are employees, that makes us eligible to get a group plan, right?
Sounds good, but no.
Please note too that what I have above is excerpts – cut & pastes of the actual law or Insurance Company underwriting rule. One needs to research the entire thing and not just summaries & excerpts. https://individuals.healthreformquotes.com/appeal-grievances/plain-meaning-rule/
Let’s look at for example the Blue Cross Underwriting rules Page 15 https://employers.healthreformquotes.com/companies-carriers/blue-cross-2/administrative-tools/#underwriting
Corporations – C Corp, S-Corp
Corporations must provide the following:
} Quartertly State Tax Withholding Report, or payroll report.
If officer(s) is/are not one the quarterly wage report, please also submit the following:
} Anthem Eligibility Statement
And one of the legal documents below:
} Statement of Information (Articles of Incorporation with stamped meeting minutes listing the names of the officers may be considered).
} Tax Form 1120 with Schedule 1125E (for C Corp).
} For S-Corps, form 2553 signed by all officers.
Corporations established out of state will also need to provide a Certificate of Qualification or Statement by Foreign Corporation in addition to the above documentation.
If the percentage of ownership is zero, the enrolling corporate officer must appear on the Quarterly State Tax Withholding Report.
Two percent S Corp shareholders, owners and spouses or domestic partners of officers or partners do not constitute common-law employees.
https://employers.healthreformquotes.com/ab-1083/definitions/employer/employee/bonafide-employee/govt-definitions-employee/#common
Husband, Wife & Daughter?
Both my wife and I have S-Corps, my wife has been operating for over 10 years. I recently became an S-Corp. (We both work a psychotherapists).
My wife’s S-Corp has three employee currently. I am an employee as well as as our daughter.
***Since you have a non-spousal employee, your daughter we may be able to do it.
We are all paid thru the S-corp.
Can we qualify for health insurance as a small business?
***Since you have a non – spousal employee, it should be good. Please send your DE 9 and whatever proofs you have handy to show you are a business.
We were able two year ago.
Has the law changed?
***Yes!! Here’s details. I have your census information, if you want a quote just let me know. Website visitors can enter their census here both online and excel for quotes 24/7.
Thank You
We want UCLA
https://medicare.healthreformquotes.com/coverage-choices/provider-lists/ucla/
how do the rates compare between family plans
http://www.quotit.net/eproIFP/webPages/infoEntry/InfoEntryZip.asp?license_no=0596610
vs group plans?
https://employers.healthreformquotes.com/instant-proposal/
Here are the Group Plans that we can get you that UCLA shows as accepted on their website
https://www.uclahealth.org/health-plans
Health insurance through your employer: HMO insurance and POS insurance
Aetna
Anthem Blue Cross
Blue Shield of California*
Cigna
Health Net of California
UnitedHealthcare
Vivity (offered by Anthem Blue Cross) (if your group has 100 or more employees)
Health insurance through your employer: PPO insurance
Aetna
Anthem Blue Cross
Blue Shield of California
Cigna
Health Net of California
UnitedHealthcare
Here’s our carrier table of contents for more details, administrative guides, etc.
https://employers.healthreformquotes.com/companies-carriers/
Health insurance purchased by individuals, families and small businesses
Where UCLA is saying Small Biz concerns me. That means and one should always check BOTH, the provider website and the Insurance Company provider list.
https://www.quotit.net/eproIFP/webpages/providers/providersGroup.asp?license_no=0596610
If you use Covered CA, no extra charge to use an agent, Blue Shield offers several plans that may cover care at UCLA Health. Call Blue Shield at 888-626-6780 for more information.
If you go through a broker or want to buy directly from an insurer, try the insurance company Oscar. Oscar offers Oscar EPO – Circle Network for individuals, families and small businesses that covers care at UCLA Health.
Coverage at UCLA through the health insurance exchange (Covered CA) for 2020
Blue Shield Exclusive PPO Network
https://individuals.healthreformquotes.com/companies/blue-shield/member-portal/provider-finder/
Oscar EPO – Circle Network
https://individuals.healthreformquotes.com/companies/oscar-insurance/
Oh yeah, and by the way, as we discussed on Zoom, you suggested that we do a Bronze HSA
https://individuals.healthreformquotes.com/misc-coverages/hsa/
so that we can keep our premiums low.
Here’s the Blue Shield Subsidized Covered CA Quote, no extra charge to use an agent. You can appoint us as your broker with these instructions.
https://steveshorr.com/intro/15-reasons/covered-ca-agent-appointment-instructions/
I hate it that Covered CA is advertising so much and Insurance Companies are sending out renewals now, when Open Enrollment doesn’t really start till 11.1.2020.
https://individuals.healthreformquotes.com/pp-aca-obamacare-introduction/enrollment/
To get Oscar Circle network, you have to go direct, no extra charge for broker support. These are the 2020 rates, as my quote engine doesn’t have the 2021 rates. I just checked Oscar’s site and only New York has the 2021 rates & benefits.
So, it’s not that Oscar is more expensive. You are getting a $1,200 subsidy in Covered CA
In an agent bulletin, Oscar said they would have HSA’s for 2021.
Here’s the group quotes. No subsidy! There would still be the Section 106 deduction. Although you should be able to get that as self employed…
https://employers.healthreformquotes.com/tax-credit/section-106/
Blue Shield group
Oscar – 2020 rate. It’s really too soon to compare….
Pre ACA/Obamacare there was underwriting for individuals. Small Groups could qualify as husband and wife… Small Group over 2 lives were guaranteed issue AB 1672 with no medical questions.
https://employers.healthreformquotes.com/ab-1672/
Rates are based mostly on claims… Medical Loss Ratio
https://individuals.healthreformquotes.com/pp-aca-obamacare-introduction/medical-loss-ratio-mrl/
Please note that under Health Care Reform, Agents are working for barely minimum wage. Covered CA advertising seems to let them get the “cream.” Heck, if you go to UCLA’s website, they barely mention brokers and tell you to call the Insurance Company or Covered CA directly.
So, please, appoint us as your broker so we can get compensated. We are NOT salaried to answer complex questions. Nor do we get any reimbursement for the costs of maintaining this website.
Especially annoying is that Covered CA wants us to spend additional time doing applications for Medi Cal even if we’ve spend two hours explaining it… We do not get compensated one penny for Medi-Cal!
https://medi-cal.healthreformquotes.com/
Learn more here https://insuremekevin.com/how-much-do-health-insurance-agents-earn/