United Benefit Advisors Insight and Analysis Blog

Controlled Groups and Affiliated Service Groups: How They Apply to the ACA

Posted by: Danielle Capilla    Oct 18, 2016 10:30:00 AM

The Patient Protection and Affordable Care Act (ACA) imposes a penalty on “large” employers that either do not offer “minimum essential” (basic medical) coverage, or who offer coverage that is not affordable (the employee’s cost for single coverage is greater than 9.5 percent of income) or it does not provide minimum value (the plan is not designed to pay at least 60 percent of claims costs). A large employer is one that employed at least 50 full-time or full-time equivalent employees during the prior calendar year. To discourage employers from breaking into small entities to avoid the penalty, the ACA provides that, for purposes of the employee threshold, the controlled group and affiliated service group aggregation rules will apply to health plans. Essentially, this means that the employees of a business with common owners or that perform services for each other may need to be combined when determining if the employer is “large.”

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Topics: ACA, PPACA, minimum essential coverage, Danielle Capilla, Large Employers, controlled group, affiliated service group