What Happens When Your Company Hits 50 Employees: A Benefits Compliance Guide

Growing your company to 50 employees is a milestone worth celebrating. But it also triggers a set of compliance requirements that catch many employers off guard.

Once you cross the 50-employee threshold, the federal government considers you an Applicable Large Employer, and a new set of rules applies to your benefits program, your leave policies, and your reporting obligations.

Here is what changes and how to prepare for it.

The ACA Employer Mandate

The most significant change at 50 employees is the Affordable Care Act's employer mandate. As an Applicable Large Employer, you are required to offer affordable, minimum-value health insurance to all full-time employees and their dependents.

Full-time is defined as employees working an average of 30 or more hours per week. If you have variable-hour employees, you will need a measurement system to determine which employees qualify.

Affordable means that the employee's share of the premium for the lowest-cost self-only plan cannot exceed a certain percentage of their household income. Since you do not know employees' household incomes, you can use one of the IRS safe harbors — typically based on the employee's W-2 wages or their hourly rate.

Minimum value means that the plan must cover at least 60 percent of the total allowed costs of covered benefits.

If you fail to offer coverage that meets these standards, you face potential penalties. The penalty for not offering coverage at all can be substantial — calculated on a per-employee basis across your entire workforce.

ACA Reporting Requirements

As an Applicable Large Employer, you are also required to file annual reports with the IRS documenting the coverage you offered to each full-time employee.

This involves two forms. The 1095-C is provided to each full-time employee and documents the coverage they were offered, the cost of that coverage, and whether they enrolled. The 1094-C is the transmittal form that summarizes your company's overall offering and is filed with the IRS.

These forms are due annually, and the penalties for failing to file or filing inaccurately have increased over the years. Most employers use their payroll provider or benefits administration platform to generate these forms, but you need to make sure the data feeding into those systems is accurate.

FMLA Requirements

The Family and Medical Leave Act applies to employers with 50 or more employees within a 75-mile radius. Under FMLA, eligible employees are entitled to up to 12 weeks of unpaid, job-protected leave per year for qualifying reasons.

Qualifying reasons include the birth or adoption of a child, caring for a spouse, child, or parent with a serious health condition, the employee's own serious health condition, and certain military family leave situations.

Employees are eligible for FMLA if they have worked for you for at least 12 months and have logged at least 1,250 hours in the past year.

Managing FMLA requires clear policies, proper documentation, and consistent enforcement. Many employers get into trouble not because they deny leave, but because they apply their policies inconsistently or fail to provide required notices.

EEO-1 Reporting

Employers with 100 or more employees — or 50 or more employees if you are a federal contractor — are required to file an annual EEO-1 report with the Equal Employment Opportunity Commission.

This report requires you to categorize your workforce by job category, race, ethnicity, and gender. It is used for statistical purposes and to support civil rights enforcement.

While the 50-employee threshold only triggers EEO-1 reporting for federal contractors, it is worth understanding now because many growing companies reach 100 employees within a few years.

You Move from Small Group to Large Group

In the health insurance market, employers are categorized as either small group or large group. In most states, the threshold is 50 employees, though some states set it at 100.

This matters because the small group and large group markets operate under different rules. In the small group market, carriers must offer community-rated pricing — meaning they cannot rate your group based on your specific claims experience. In the large group market, carriers can experience-rate your group, meaning your pricing is based on your actual claims history.

This can work for or against you. If your group is healthy, experience rating can result in lower rates than you would get in the small group market. If your group has had high claims, you may face higher rates.

The move to large group also opens up funding options that are not available in the small group market, including level funded and self-funded plans. This is actually one of the benefits of crossing the 50-employee threshold — you gain access to strategies that can significantly reduce your costs.

What You Should Do Now

If you are approaching or have recently crossed the 50-employee mark, here is a practical checklist.

Start by counting your full-time equivalent employees accurately. The ACA uses a specific calculation that includes full-time employees plus the full-time equivalents of your part-time employees. Make sure you understand whether you are at, above, or below the threshold.

Next, audit your current benefits offering. Does it meet the ACA's affordability and minimum value requirements? If not, you need to adjust your plan design or contribution strategy before you face penalties.

Set up your ACA reporting process. Work with your payroll provider or benefits administrator to make sure you can generate accurate 1095-C and 1094-C forms.

Review your leave policies. Make sure you have a written FMLA policy, that your managers understand it, and that you have a process for tracking leave requests and eligibility.

Finally, talk to your benefits broker about your options in the large group market. This is an opportunity to explore funding strategies and plan designs that were not available to you as a small group employer.

The Bottom Line

Hitting 50 employees is a growth milestone, but it comes with real compliance obligations. The employers who handle this transition well are the ones who plan ahead, invest in the right systems and advisors, and treat compliance as a foundation — not an afterthought.

If you are unsure whether your company is ready for the requirements that come with 50 employees, it is worth getting expert guidance now rather than discovering gaps during an audit.

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Approaching the 50-employee mark and not sure what you need to do? Schedule a free consultation and we will help you prepare for the compliance requirements ahead.