How Many Employees Are Needed For Group Health Insurance?

How Many Employees Are Needed For Group Health Insurance?

The appeal of group health insurance is that it’s often cheaper than individual plans which offer the same benefits and coverage options. The thing is, not everyone qualifies for group health insurance. Read on to learn what is the minimum number of employees needed for group health insurance, and what additional requirements must be met.

What Are The Minimum Employees Needed For Group Health Insurance?

  • Have between 1 – 50 employees: This qualifies your company for small business group coverage.
  • Have 50 or more employees: If you have over 50 employees, your company will qualify for large group coverage.

What’s The Group Health Insurance Definition Of An “Employee”?

Your employees must be working full time or do the equivalent of full-time work. A full-time employee would be working at least 30 hours per week. The interesting definition of an equivalent would be a combination of employees who all don’t necessarily work full time individually but amount to full-time hours. Think 3 employees who are working 10 hours per week.

What Requirements Must Be Met To Consider Someone An “Employee”?

To be considered employees, the criteria of the IRS’ Common Law Test must be met. The Common Law Test is a guide used by the IRS to determine if someone should be classified as an employee or an independent contractor.

The main component which must be met in order for the IRS to consider someone an employee is that the employee must have control over what work is done and how it gets done.

Find out more information about the Common Law Test on the IRS’ website.

How Important Is This Type Of Employee?

Very important. While one of the employees on the insurance plan can actually be the employer, the other party cannot be an owner or employer. Additionally, the other employee(s) cannot be:

  • The spouse of an owner
  • A family member of an owner
  • A business partner
  • A seasonal worker
  • A contractor

Can You Offer Group Health Insurance To Part-Time Or Seasonal Workers?

This is at the discretion of the employer, who can do so as they wish. But here’s something to note, you must insure at least 70% of your uninsured full-time employees. If they have some form of coverage elsewhere, the 70% rule does not apply.

Is There A Flexible Condition To The 70% Rule?

Yes, and it all depends on timing. Suppose you enroll in small business group health insurance from November 15 to December 15 of the year. In that case, the 70% participation rule does not apply here, and you can actually get approval for small business group health insurance with less than 70% of your eligible full-time employees.

This sounds advantageous, though, especially if there is any chance or certainty that some eligible employees would be interested in the coverage. It can become frustrating knowing one or two employees who refuse coverage can disqualify the company from getting the small business group health insurance, so this helps a lot.

How Small Is Too Small? Can An Organization With Only Two Employees Be Covered?

Yes, only two employees can be covered. You actually don’t need as many employees as you thought to get small business group health insurance. You just need to understand the small business definition within the health insurance sphere, which would give you some insight into whether or not you can get a group plan to cover yourself and your employee, and don’t forget the criteria to be met.

What Makes Group Health Insurance Beneficial?

Having a wide array of options is probably the most appealing and obvious benefit, coupled with employees’ saving a good amount on monthly premiums. Furthermore, there are tax benefits when operating with a group plan. A tax or accounting advisor can give further information and clarity on this benefit.

Related Resources