For restaurant owners

Do Restaurants Have to Offer Health Insurance? Only at 50 or More Full-Time Employees

Only if your restaurant is a large employer. As of October 17, 2026, under current law, federal law calls you a large employer if you had an average of 50 or more full-time workers last year, counting part-time hours as full-time equivalents. Smaller restaurants don't have to offer coverage under this federal rule. State or local rules can also apply.

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By Paul Daniels, licensed insurance agent · Last reviewed

Restaurants run on mixed crews. You may have full-time cooks, part-time servers, and extra help in your busy season. That makes it hard to know if the federal health insurance rule applies to you.

This guide covers the 50-employee rule for restaurants: how to count your staff, how seasonal and changing schedules fit in, and what smaller restaurants can do. For a step-by-step guide to setting up a plan, see how to offer health insurance to employees.

The short answer: the 50-employee rule

Federal law (26 U.S.C. 4980H) calls it the employer shared responsibility rule. It applies only to applicable large employers, often called ALEs.

As of October 17, 2026, under current law, you are an ALE this year if you had an average of at least 50 full-time employees last year, including full-time equivalents. The IRS says most employers are below this size.

If you are an ALE, you don't have to buy insurance for everyone. But if you don't offer coverage to at least 95% of your full-time workers and their children, you may owe the IRS a payment. That happens if at least one full-time worker gets a Marketplace tax credit. You may also owe a payment if the coverage isn't affordable or doesn't meet minimum value, and a full-time worker gets a credit.

Own more than one restaurant? Federal law may treat companies under common ownership as one employer when you count (26 U.S.C. 4980H(c)(2)(C)). Ask a tax pro how this applies to you.

How to count your restaurant staff

The count uses last year's numbers, month by month. Federal rules (26 CFR 54.4980H-1 and -2) explain how:

  • Full-time employees: anyone who averages at least 30 hours of service a week. 130 hours in a month counts as full time.
  • Full-time equivalents: for each month, add the hours of everyone who isn't full time. Count no more than 120 hours for any one person. Divide the total by 120.
  • Monthly total: add your full-time employees and full-time equivalents for each month.
  • Yearly average: add the 12 monthly totals and divide by 12. If it's 50 or more, you're an ALE this year.

Example, with made-up numbers: a restaurant has 30 full-time workers every month last year. It also has 40 part-time servers and hosts who each work 60 hours a month. That's 2,400 part-time hours, and 2,400 divided by 120 is 20 full-time equivalents. 30 plus 20 is 50 each month, so the yearly average is 50. This restaurant would be an ALE this year. Your numbers will be different.

Part-time workers count toward your size, but that's only for this test. If you are an ALE, the offer of coverage is only required for full-time employees.

Is your restaurant a large employer? Step 1: Full-time staff: Count workers who average 30 or more hours a week. 130 hours in a month counts as full time. Do this for each month of last year. Step 2: Part-time hours: Add up the hours of everyone else for the month. Count no more than 120 hours per person. Divide the total by 120. That's your full-time equivalents. Step 3: Average the year: Add Step 1 and Step 2 for each month, then average the 12 months. 50 or more means you're a large employer this year. Seasonal exception: over 50 for 120 days or fewer, only because of seasonal workers. THE 50-EMPLOYEE RULE Is your restaurant a large employer? Federal rules as of Oct 17, 2026, under current law. Count last year. Step 1: Full-time staff Count workers who average 30 or more hours a week. 130 hours in a month counts as full time. Do this for each month of last year. Step 2: Part-time hours Add up the hours of everyone else for the month. Count no more than 120 hours per person. Divide the total by 120. That's your full-time equivalents. Step 3: Average the year Add Step 1 and Step 2 for each month, then average the 12 months. 50 or more means you're a large employer this year. Seasonal exception: over 50 for 120 days or fewer, only because of seasonal workers. General rules only. Not tax or legal advice. Sources: 26 U.S.C. 4980H; 26 CFR 54.4980H-1, -2, -3; IRS ALE page (last reviewed Aug. 8, 2026). Accessed Oct 17, 2026.
Sources: 26 U.S.C. 4980H; 26 CFR 54.4980H-1, -2, and -3 (eCFR, current as of Oct 17, 2026); IRS, "Determining if an employer is an applicable large employer" (last reviewed Aug. 8, 2026). General rules only, as of October 17, 2026. Accessed Oct 17, 2026.

Busy seasons and the seasonal worker exception

Many restaurants add staff for summer, the holidays, or tourist season. Federal law has an exception for this.

You are not treated as having more than 50 full-time employees if both of these are true (26 U.S.C. 4980H(c)(2)(B)):

  • Your workforce was over 50 for 120 days or fewer during the year.
  • The workers over 50 during those days were seasonal workers.

A seasonal worker does labor or services on a seasonal basis. The IRS gives retail workers hired only for the holidays as an example. Employers can use a reasonable, good faith reading of the term (26 CFR 54.4980H-1).

Empty restaurant tables with yellow and red tablecloths and wooden chairs.
Modified from the original: resized and converted to WebP. Photo for illustration only: "Tables restaurant Calle Defensa Monserrat Buenos Aires" by Hermann Luyken, own work via Wikimedia Commons, released under CC0 1.0.

Servers and cooks with changing hours

Once you know you're an ALE, the next question is who counts as full time. That can be hard when hours change from week to week.

Federal rules (26 CFR 54.4980H-3) let ALEs choose a look-back measurement method. Here's how it works:

  • You pick a measurement period of 3 to 12 months and look back at each worker's hours.
  • If a worker averaged 30 or more hours a week, you treat them as full time for the next stability period, even if their hours drop.
  • The stability period must be at least 6 months, and no shorter than the measurement period.
  • New hires whose hours you can't predict (variable hour employees) can get their own initial measurement period of 3 to 12 months.

This method has more rules than we can cover here. A payroll provider or tax pro can help you set it up.

If your restaurant is smaller

Under 50 full-time employees, counting equivalents? You don't have to offer coverage under federal law. State or local rules can also apply. Many restaurants still want to help their staff. BLS data show that in March 2026, 37% of private industry workers in leisure and hospitality, the group that includes restaurants, had access to health benefits through work. For all private industry workers, it was 71%.

Here are the main options:

  • A small group plan: one plan you buy for your team. See our page on small group health insurance.
  • An ICHRA: you give tax-free money for workers to buy their own plans. It works for any size employer.
  • A QSEHRA: only for employers with fewer than 50 full-time workers, counting full-time equivalents, and no group plan (26 U.S.C. 9831(d)). For 2026, the IRS limit is $6,450 for a worker alone and $13,100 for a worker with family. The IRS had not posted 2027 limits as of October 17, 2026.

To compare the two arrangements, see ICHRA vs QSEHRA. If you are an ALE and use an ICHRA, it also has to pass an affordability test. See ICHRA affordability.

The small business tax credit, and a Florida catch

Some small employers can get a tax credit for health premiums (26 U.S.C. 45R). To qualify, you generally must:

  • Have fewer than 25 full-time equivalent workers.
  • Pay average wages under an IRS limit. For tax year 2025, it was less than $67,000 per full-time equivalent. The IRS's draft 2026 instructions list less than $69,000.
  • Pay at least 50% of the cost of employee-only coverage for each worker.
  • Offer a plan through SHOP.

One catch for Florida: in CMS plan data for 2026, we found no SHOP medical plans listed for Florida, only two children's dental plans. The credit generally requires a SHOP plan, so for 2026 most Florida employers may not be able to claim it. The IRS gives relief only to employers in a county with no SHOP plan that properly claimed the credit for 2025. Ask a tax pro if it applies to you.

How we can help

Daniels Health Advisors is licensed in 30+ U.S. states. We can help you compare group plans and ICHRA options for your restaurant.

Your next step

We are an independent brokerage, and Paul is a licensed agent. Tell us how many people you employ and how their hours run, and we can walk you through your options. You do not pay us for our help. We are paid by the insurance companies when you enroll. Your price for a plan is the same whether you use us or sign up on your own. Commissions can differ by company.

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Restaurant health insurance questions

Do restaurants have to offer health insurance?

Only large employers do. Under federal law, a restaurant is a large employer if it had an average of 50 or more full-time employees last year, counting full-time equivalents. Smaller restaurants don't have to offer coverage under this federal rule, but check state and local rules too.

Do part-time workers count toward the 50?

They count through full-time equivalents. For each month, add part-time hours, counting up to 120 hours per person, and divide by 120. But the offer of coverage is only required for full-time employees.

How many hours is full time?

Under federal rules, full time means an average of at least 30 hours of service a week. 130 hours in a month counts as full time.

Do seasonal workers count?

They count, but there's an exception. You aren't treated as having over 50 full-time employees if you were over 50 for 120 days or fewer, and the extra workers were seasonal.

What is the look-back measurement method?

It's a way for large employers to decide who is full time when hours change. You look back over 3 to 12 months of hours. Workers who averaged 30 or more hours a week are treated as full time for a set period after that.

Can a small restaurant get a tax credit for health insurance?

Some can. Generally, you need fewer than 25 full-time equivalent workers and average pay under an IRS limit. You must pay at least half of employee-only premiums and buy through SHOP. In Florida, CMS 2026 plan data list no SHOP medical plans, so ask a tax pro first.

Sources

  1. 26 U.S.C. 4980H, Shared responsibility for employers regarding health coverage (U.S. Code). https://www.law.cornell.edu/uscode/text/26/4980H (accessed Oct 17, 2026)
  2. eCFR, 26 CFR 54.4980H-1, Definitions (full-time employee, 130 hours, seasonal worker, variable hour employee). https://www.ecfr.gov/current/title-26/section-54.4980H-1 (accessed Oct 17, 2026)
  3. eCFR, 26 CFR 54.4980H-2, Applicable large employer and applicable large employer member (counting full-time equivalents). https://www.ecfr.gov/current/title-26/section-54.4980H-2 (accessed Oct 17, 2026)
  4. eCFR, 26 CFR 54.4980H-3, Determining full-time employees (look-back measurement method). https://www.ecfr.gov/current/title-26/section-54.4980H-3 (accessed Oct 17, 2026)
  5. IRS, "Determining if an employer is an applicable large employer" (page last reviewed Aug. 8, 2026). https://www.irs.gov/affordable-care-act/employers/determining-if-an-employer-is-an-applicable-large-employer (accessed Oct 17, 2026)
  6. IRS, "Questions and answers on employer shared responsibility provisions under the Affordable Care Act" (page last reviewed July 20, 2026). https://www.irs.gov/affordable-care-act/employers/questions-and-answers-on-employer-shared-responsibility-provisions-under-the-affordable-care-act (accessed Oct 17, 2026)
  7. 26 U.S.C. 9831, General exceptions (qualified small employer HRAs) (U.S. Code). https://www.law.cornell.edu/uscode/text/26/9831 (accessed Oct 17, 2026)
  8. IRS, Rev. Proc. 2025-32, section 4.63 (2026 QSEHRA limits) and section 4.09 (2026 §45R average-wage amount, $34,100) (PDF). https://www.irs.gov/pub/irs-drop/rp-25-32.pdf (accessed Oct 17, 2026)
  9. 26 U.S.C. 45R, Employee health insurance expenses of small employers (U.S. Code). https://www.law.cornell.edu/uscode/text/26/45R (accessed Oct 17, 2026)
  10. IRS, Instructions for Form 8941 (2025) (PDF). https://www.irs.gov/pub/irs-pdf/i8941.pdf (accessed Oct 17, 2026)
  11. IRS, Instructions for Form 8941 (2026), early-release draft (PDF; not final). https://www.irs.gov/pub/irs-dft/i8941--dft.pdf (accessed Oct 17, 2026)
  12. CMS, Plan Year 2026 Plan Attributes Public Use File (Florida SHOP rows; ZIP). https://download.cms.gov/marketplace-puf/2026/plan-attributes-puf.zip (accessed Oct 17, 2026)
  13. U.S. Bureau of Labor Statistics, National Compensation Survey series NBU21570000000000028171, access to healthcare benefits, leisure and hospitality (March 2026: 37%). https://data.bls.gov/timeseries/NBU21570000000000028171 (accessed Oct 17, 2026)
  14. U.S. Bureau of Labor Statistics, "Employee Benefits in the United States, March 2026" (released Sept. 25, 2026). https://www.bls.gov/news.release/ebs2.nr0.htm (accessed Oct 17, 2026)
  15. Wikimedia Commons, "2011.10.17.090653 Tables restaurant Calle Defensa Monserrat Buenos Aires" by Hermann Luyken, own work, CC0 (photo). https://commons.wikimedia.org/wiki/File:2011.10.17.090653_Tables_restaurant_Calle_Defensa_Monserrat_Buenos_Aires.jpg (accessed Oct 17, 2026)
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