Updated April 2026 · Florida Plan Finder · Licensed Florida Health Insurance Producer

Controlled Group Aggregation Rules for Florida Small Business Health Insurance

A Florida business owner with multiple legal entities (LLCs, S-corps, partnerships) must aggregate employees across all related entities for ACA employer mandate testing, Section 45R credit eligibility, and most other federal employee benefit rules. The aggregation framework comes from IRC Section 414 and applies parent-subsidiary, brother-sister, and affiliated service group analysis. Owners often discover too late that two separate businesses they treated as independent are actually a single 'controlled group' for federal benefits purposes.

Related resources:

ACA Employer Mandate When Mandate Applies Common Ownership FTE

Three Types of Controlled Group

Parent-subsidiary: One entity owns 80% or more of another. Parent and subsidiary are aggregated. Chain ownership (A owns 80% of B, B owns 80% of C) aggregates all three.
Brother-sister: Five or fewer common owners hold (a) more than 50% of each entity AND (b) collectively at least 80% of each entity (with identical ownership measured for the 80% test).
Affiliated service group: Service-providing entities (law, accounting, consulting, healthcare) that perform services for one another or for common clients. Triggers aggregation even without 80% ownership overlap.

Brother-Sister Example: Florida LLCs

Owner A owns 60% of LLC-1 and 70% of LLC-2. Owner B owns 40% of LLC-1 and 30% of LLC-2.

Test	Result
50% test (each owner's share over 50% of each entity?)	Owner A: 60%/70% — both over 50% ✓; Owner B: 40%/30% — neither over 50% ✗
80% test (combined identical ownership ≥ 80%?)	Identical ownership = lesser of A's two stakes (60%) + lesser of B's two stakes (30%) = 90% ✓
Brother-sister controlled group?	No — fails the 50% test for Owner B (only counts owners who exceed 50% in each entity)

The test is technical — small ownership changes can flip the result. Consult a CPA before assuming entities are not aggregated.

Aggregation Consequences

Federal Rule	Aggregation Effect
ACA Employer Mandate (50 FTE)	FTE counts combined across all controlled-group entities
Section 45R Tax Credit	FTE and average wage tested across all entities; one credit per group
Section 125 nondiscrimination	HCE testing combined
Health plan nondiscrimination (Section 105)	Combined testing for self-funded plans
FMLA (50 within 75 miles)	Combined headcount

Florida-Specific Common Patterns

Common controlled-group patterns among Florida small businesses:

Restaurant owner with separate LLCs for each location (often brother-sister aggregated)
Real estate investor with property-management LLC + property-holding LLCs (parent-subsidiary)
Medical practice with separate management company (affiliated service group)
Construction company with sister equipment-leasing entity (brother-sister)

Strategy When Aggregated

Single plan for all entities: simpler administration, ensures nondiscrimination compliance
Separate plans per entity: permitted but must satisfy nondiscrimination across the group
ICHRA per employee class: can vary by entity if entities are different "locations" (an ICHRA permitted class)
Separate broker/admin per entity: increases cost and risk of inconsistent compliance

Frequently Asked Questions

My two LLCs are completely independent operations — does the rule still apply?

Yes — controlled-group aggregation is determined by ownership/structure, not operational independence. Two LLCs owned 100% by the same person are automatically aggregated even if they operate in completely different industries with no shared employees.

Does aggregation change my entity returns?

No — controlled-group aggregation is a benefit-testing rule, not an income-tax filing rule. Each entity continues to file its own 1065, 1120-S, etc. Only the combined employee count and benefits testing change.

What about a 50/50 partnership where neither partner exceeds 50%?

A 50/50 split fails the brother-sister 50% test (no owner exceeds 50%). The entities are not brother-sister aggregated. But other tests (parent-subsidiary, affiliated service) might apply if structure or services overlap.

Confirm Whether Your Florida Entities Are Controlled-Group Aggregated

A licensed Florida broker plus a CPA can run the §414 analysis for your specific structure.

Get a Consultation

Licensed Florida Health Insurance Producer · NPN #21249133
Controlled group rules are governed by IRC §414(b), (c), and (m). Consult a CPA experienced with employee benefit testing.