Joel Libava
Franchise employee health coverage matters a lot. Why?
For franchisees, it helps you hire faster, potentially keep great people, and deliver a consistent employee experience across locations.
In addition, healthier teams mean better service and fewer absences.
In addition, franchisors can boost unit economics with vetted, system-wide options.
Quick tips for franchisees: know your workforce mix, offer tiered and voluntary benefits, look at association or franchise plans, tie benefits to scheduling/payroll for ACA tracking, and communicate open enrollment early.
And although 2026 is still months off, now is the time to plan your franchise business health coverage for the new year.
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Remember, employee notices must go out by early November, so your decisions should be finalized before then. And it’s coming fast. So, start exploring options and comparing plans now to ensure you’re ready.
Franchise Employee Health Coverage: Important Information for Franchises with 50 or More Employees
According to my long-time friend and small business tax expert, Barbara Weltman, the following applies to franchise businesses:
“If your business has 50 or more full-time or full-time equivalent employees in 2025, then you must provide minimum affordable health coverage in 2026 or pay a penalty.”
And here they are:
“Penalty A: If an ALE* that does not offer minimum essential coverage to at least 95% of its full-time employees and at least one full-time employee receives the premium tax credit for purchasing coverage through the Marketplace, the penalty is $3,340 per employee (with the first 30 employees excluded).“
“Penalty B: If an ALE member that does offer minimum essential coverage to at least 95% of its full-time employees and at least one full-time employee receives the premium tax credit for purchasing coverage through the Marketplace because the coverage offered was not affordable, the penalty is $5,010 for each employee that receives the premium tax credit.“
Sounds complicated.
That’s because it is.
That’s why you need to read the entire post Barbara wrote on this topic.
Then, find an expert to work with, so your franchise business isn’t penalized in 2026.
About the Author
Joel Libava is The Franchise King® — an independent franchise advisor with 25+ years in the industry, two published books on franchising, and his writing has been featured in The New York Times, Forbes, CNBC, Entrepreneur® Magazine and others. In addition, he wrote exclusively for the U.S. Small Business Administration blog for eight years. He doesn't sell franchises. Instead, Joel helps you figure out if franchise ownership is actually right for you — and if it is, teaches you his powerful, proven-to-work franchise research techniques, so you can make a smart, informed decision on a franchise to own and be your own boss.
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