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Broker News | December 2015 | Vol. 10 No. 11
Broker News | December 2015 | Vol. 10 No. 11

When Do Small Business Owners Qualify as Common Law Employees?

The Affordable Care Act requires that in order for a business to qualify for group coverage, it must have common law employees.  Owners are, for the most part, not considered common law employees.  However, there are certain circumstances in which owners are considered common law employees. The below factors should be used when deciding if a business qualifies for group coverage:

  • Sole proprietorships where owners or owners and their spouse are the only ones enrolled in coverage, are never eligible for group coverage, regardless of whether they are captured on an NYS-45.  Sole proprietorships with “regular” employees enrolled are eligible for group coverage.
  • The Common Law Attestation can be used to determine if there is a common law employee enrolled in the group sponsored health plan. All documentation will be reviewed by Underwriting for a final determination.  Simply submitting documentation does not mean you qualify for coverage.
  • Please note that, although the attestation form is only needed at this time, we may request the NYS45 and/or business tax documents at a later time. 
  • Retirees and enrolled COBRA members do not meet the definition of common law employees in 2016.  Therefore, if these individuals are the only ones enrolled, members would still need to move to an individual product.
  • Businesses may qualify for group health coverage if common law employees are enrolled in a group sponsored health plan other than Excellus BlueCross BlueShield. The updated waiver form can be used to confirm these situations.
  • For businesses with common law employees who are covered under an owner (who is not a common law employee) as a dependent (where the dependent is captured on a NYS-45) – the group will qualify for group coverage until the child dependent ages off (typically at age 26) and/or the dependent common law employee enrolls on their own contract through the group sponsored health plan.

The Eligibility Grid shows the type of business structure and the form that business would file for their tax returns.  Based on the type of business, you can determine if an owner would be considered a common law employee. The Segment column shows if the individual(s) qualify for group coverage or would have to go to an individual product.

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