Affordable Care Act - Controlled Groups

Beware of the Danger Zone

By now, most everyone is aware that the Affordable Care Act (ACA) is starting to kick into high gear and that Applicable Large Employer Groups (ALEs) will have their first annual tax reports due at the end of January 2016. This large-employer mandate will require applicable large employers, with 50 or more full-time equivalent employees, to offer affordable, minimum-value coverage to full-time employees and their dependents (to age 26).

As you start to breathe a sigh of relief that you have fewer than the 50 or more full-time equivalent employees, be aware that beneath the surface lies some hidden aspects of the Affordable Care Act. If an employer has multiple companies, each company may or may not be considered separate employers under the ACA. An employer could own several small companies (example – each with 20 employees) with each having fewer than 50 full-time equivalent employees, but under the controlled group rules, the common ownership could add up to more than 50 full-time employees and an employer could become an Applicable Large Employer.

The controlled group rules apply to Brother-Sister companies, Parent-Subsidiary companies, Affiliated Service companies, or any combination of the above.  If a common ownership exists, then the total number of employees for the group must be added together to determine ALE status for the ACA.

Employers that fail to follow the Affordable Care Act and do not offer insurance coverage to 95% of their full-time employees (70% for 2015) would be subject to a penalty. Penalties can also be imposed for those employers that do offer coverage but the coverage does not provide “minimum value” or is not “affordable.”

Larger companies will use their payroll service provider to prepare the appropriate reports, but make sure that the other companies that are under common ownership and may not use a payroll provider are not forgotten about.  Please contact your Schneider Down tax representative to ensure that you are compliant with the Affordable Care Act and visit our other articles on the Affordable Care Act.   

You’ve heard our thoughts… We’d like to hear yours

The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2020 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

our thoughts on

Pennsylvania EITC Applications Open July 1
Tax BY Antoinette Luchini
Definitions of Real and Incidental Property in New Like-Kind Exchange Regulations
The Supreme Court and Affordable Care Act Constitutionality - Protecting Your Ability to Recover Prior Year Federal Taxes
IRS Guidance Provided on the Silo of CARES Act NOLs
Additional Guidance and Relief for Opportunity Zones from the IRS
What to Expect During a Sale Transaction

Register to receive our weekly newsletter with our most recent columns and insights.

Have a question? Ask us!

We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible.

Ask us

contact us

Map of Pittsburgh Office

One PPG Place, Suite 1700
Pittsburgh, PA 15222
p:412.261.3644     f:412.261.4876

Map of Columbus Office

65 East State Street, Suite 2000
Columbus, OH 43215
p:614.621.4060     f:614.621.4062

Map of Washington Office
Washington, D.C.

1660 International Drive, Suite 600
McLean, VA 22102