Know the Rules Before They Catch You Off Guard
Benefits come with deadlines, notices, and requirements. Get oriented on what employers need to know, so you can plan ahead with confidence.
Where to Start With Benefits Rules
Most small employers face fewer federal benefits rules than they expect, and a handful are worth knowing from day one. The federal employer mandate applies to employers averaging at least 50 full-time employees, counting full-time equivalents, and the IRS notes that the vast majority of employers fall below that line. COBRA continuation coverage generally applies to group health plans at employers with 20 or more employees. Employers who offer an ICHRA give employees a written notice ahead of the plan year. State rules can add more, and every business is different, so treat these guides as a starting point for a conversation with your advisor or attorney.
Benefits Compliance Basics for Small Employers
The rules that tend to matter first: when the employer mandate applies, how COBRA works, and the notices employers give their teams.
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Benefits Administration
Hands-on help with the enrollment paperwork and employee changes that keep your benefits running smoothly.
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HR Solutions
Guidance on onboarding, policies, and everyday employee questions, without hiring a full department.
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ICHRA Plans for Small Businesses
A monthly allowance approach with its own notice requirement, set up with an advisor who handles the details.
Learn moreWhat Applies at Different Sizes
Two federal thresholds shape most of your options: COBRA at 20 employees and the employer mandate at 50. Here is how that plays out as your team grows.
Fewer than 20 employees
Federal COBRA generally does not apply, and neither does the employer mandate.
Worth knowing: state continuation laws may apply instead. Pennsylvania, New Jersey, and Delaware each have one that can reach smaller employers, and the details differ by state.
20 to 49 employees
COBRA generally applies once your group health plan's employer had 20 or more employees in the prior year. The employer mandate generally does not apply below 50 full-time employees, counting full-time equivalents.
Worth knowing: the two thresholds are measured in different terms, so have your advisor run each count.
50 or more full-time employees
You are likely an applicable large employer. The employer mandate asks you to offer affordable coverage that provides minimum value to full-time employees and their dependents, or potentially make a payment to the IRS. COBRA applies too.
Worth knowing: whether you count as a large employer depends on your workforce in the preceding calendar year.
These thresholds are the headlines. Counting rules and exceptions matter, so confirm where you land with your advisor or attorney.
Compliance Questions Owners Ask
How long does COBRA coverage last?
COBRA coverage usually lasts up to 18 months. Certain life events can extend it to 36 months.
Who pays for COBRA coverage?
The former employee usually pays the full premium, up to 102 percent of the plan's cost, unless the employer agrees to cover some or all of it, for example as part of a separation agreement.
How long does an employee have to elect COBRA?
Employees have 60 days to elect COBRA, counted from the date their job-based coverage ends or the date they receive the election notice, whichever is later.
What notices does COBRA require from employers?
A general notice explaining COBRA rights goes out within 90 days after an employee enrolls in the plan. After certain qualifying events, such as a termination or a cut in hours, the employer notifies the plan within 30 days. Your plan administrator or advisor can confirm the exact timelines for your plan.
Who counts as a full-time employee under the employer mandate?
For the employer mandate, a full-time employee is one who works an average of at least 30 hours of service a week, or 130 hours of service a month.
What happens if a large employer does not offer coverage?
An applicable large employer must offer affordable coverage that provides minimum value to its full-time employees and their dependents, or potentially make a payment to the IRS. The IRS says employers should not make a payment without first being contacted by the IRS.
This content is provided for informational purposes only and does not constitute legal or tax advice. Please consult your legal or tax advisor to determine how regulations apply to your situation.
Not Sure Where You Stand?
We can walk you through the benefits side, and your attorney or tax advisor can confirm what the rules mean for your business.
Disclosures
We are compensated by the insurance carriers for policies you choose through us. There is no direct cost to you. Compensation may vary by carrier and product. Information on this page is for educational purposes and does not constitute legal, tax, or accounting advice. Please consult your professional advisors about your specific situation. Tax treatment of ICHRA reimbursements can vary by employer and employee. We are licensed to advise clients in Pennsylvania, New Jersey, and Delaware. Contact us to confirm availability in other states.
