Benefits experts say federal agencies could be inadvertently setting a trap for some small businesses.
The Patient Protection and Affordable Care Act requires employers with 50 or more full-time employees (or equivalent) employees to offer a minimum level of health coverage or pay a penalty.
The Internal Revenue Services has ruled employers should use Internal Revenue Code “business aggregation” rules when counting employees.
The aggregation rules treat a parent and its subsidiaries as a single group, and a “brother-sister group” as a single controlled group.
Donna Baker, a Michigan accountant, testified today at a House Small Business Committee hearing on the topic that the aggregation rules are “vast and detailed,” and little known either to small business owners or to typical small business advisors.
One potential trap involves families in which different members own and run different businesses, Baker said.
Baker’s husband owns half of a dairy farm with eight employees, and she herself owns 100 percent of two companies with a total of 30 employees and half of a store with five employees.
Baker and her husband are not partners in each other’s businesses, but Baker’s name is on some land in the husband’s partnership.