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- Controlled Groups & Common Ownership
Do you own multiple businesses?
An Applicable Large Employer (ALE) can be a single company or multiple companies combined because of common ownership (such as a parent company and affiliates) under IRS rules. These so-called “controlled groups” can, sometimes, be referred to “aggregate groups.”
An aggregation of this type heavily affects entrepreneurial employer who own multiple businesses, or portions of multiple businesses. Groups with separate tax IDs, different groups of employees, different locations, and even different industries can be combined if common ownership is a factor across the businesses.
Determining whether a group of employers is a “controlled group” is not always a simple task. Certain aggregation rules apply in making this determination, and this is not a “do-it-yourself” project for health insurance brokers. The IRS has a 108-page guide for CPAs to aid them in determining controlled-group status.
Brokers should always refer clients with common ownership to a trusted CPA or tax advisor(s) for help when making this determination in accordance with Internal Revenue Code (IRC) Sections 414 (b) (c) (m) or (o). Incorrect determinations can have grave ramifications for business owners.
For more information on employer aggregation rules, see Section V.D. of the preamble to the employer shared responsibility provision regulations, Section 54.4980H-2 of the Employer Shared Responsibility Provisions (ESRP) regulations and ESRP Q&A, numbers 6 and 42. ESRP questions and answers are addressed further on Healthcare.gov.