How Many Employees Do You Need to Offer Health Insurance?

How Many Employees Do You Need to Offer Health Insurance?

How Many Employees Do You Need to Offer Health Insurance?

Did you know that companies benefit the most by offering health insurance? Health insurance makes both small and large employers more attractive. Furthermore, it attracts the best talent in the market. However, one question that puzzles most employers is how many employees they need to provide health insurance for. And, how much does it cost? For example, how much would it be for 50 employees health insurance? You need not worry; Kirby Employee Benefits is here to answer all your questions. Here is a simple directive on the number of employees you need to offer health insurance.

Employers’ Legal Requirements

No legal directive requires small companies to offer health insurance to their employees. Thus, small companies that give health insurance coverage to their employees do so of their own will. However, large companies are subjected to the Affordable Care Act. The act penalizes large employers that do not give their employees health insurance. ACA penalty for 2022 for not offering coverage is $2,750, less the first 30 full-time employees. Thus, large companies have a significant incentive to offer health insurance. One thing that business owners should note is that the ACA does not support employees demanding health care. However, the large company must provide it, or face IRS penalties.


Number of Employees a Company Needs to Offer Health Insurance

There are two primary directives for large and small companies. For small companies, the employer must have between 1 and 50 employees health coverage to be considered “small”. If you have one employee, they must not be the owner, the owner’s spouse, seasonal worker, or family member who does not work as a full-time employee. Thus, for small companies to provide health insurance, they need at least one full-time employee.

In addition, the Employee Retirement Income Security Act of 1974 (ERISA) exists for companies with one or more employees. It ensures that employers in the private industry can offer health and retirement plans. ERISA gives protection to employees in such plans. Large employers, also known as Applicable Large Employers, have 50 or more full-time equivalent employees. In order to meet ACA requirements, they need to offer coverage to at least 95% of their full-time employees, and the offer must be considered affordable under one of three safe harbor elections. ACA requires employers with 50 and more employees to extend coverage to employees’ children under 26. The children must be adopted or biological. However, foster or step-children do not apply. 

Full-Time Employee Definition

Small employers in Florida, under FL laws, must use a 25 hour work week to determine full-time employment. Large employers must use a 30 hour work week to determine if employees are eligible for coverage. Full-time equivalent employees are not full-time workers. However, if you combine them, they become equivalent to full-time workers. For instance, three employees working 10 hours a week is equal to one full-time. 

Other Useful Facts For Business Owners

If you qualify to provide health insurance to your employees, you may implement up to a 90-day waiting period. You can choose a shorter waiting period, which is becoming more attractive to employers to entice prospective employees to join their team. The 90 days is the longest period that the ACA allows for a medical plan. It ensures that employers offer coverage efficiently and cover all eligible employees. Failure to provide coverage within the timeframe can lead to penalties. 

Bottom Line

The question of how many employees you need to offer health insurance is simple. For large companies, employees should be 50 and above, while for small ones, it should range between 1 and 50. Large companies must provide health insurance according to the ACA, while small companies do so of their own will. Kirby Employees Benefits Is here for you. We can visit your company and walk you through health insurance programs and requirements. Visit our website today and contact us for more information.