Where To Go For Information
The Small Business Administration has information on its website about what small businesses need to provide in terms of health insurance, along with links to their SHOP program and information on tax credits. You can also find out about webinars and in-person training sessions run through small business development centers, SCORE chapters or Womens Business Centers. The website is constantly being updated, said the SBAs Natalia Olson. Healthcare.gov is another good resource for ACA health insurance information.
Olson recommends also talking to your lawyer and accountant, as they should be up on how the latest government changes affect small businesses. A health insurance broker is a key person for finding small business health insurance plans. It can be challenging to find an effective and knowledgeable broker, given that brokers arent highly compensated for small group plans, says Farris. Through networking, you can find a broker to help you.
With government regulations constantly changing, its tough to stay abreast of the requirements. Continue networking with other small businesses, which may have helpful information as well.
Small Business Health Insurance Options
Thanks to the ACA, small business owners can buy health insurance for their employees through approved insurance companies with the Small Business Health Options Program . Getting insurance through the SHOP Marketplace allows employers to offer health plans from multiple insurance companies and qualifies them for the Small Business Health Care Tax Credit, which can help with the cost of providing coverage.
Small business owners can also work with an insurance broker who conducts all plan research and comparisons to find the best plan for your business at no additional charge.
Group plans for small businesses are organized by metal tiers: bronze, silver, gold and platinum. Each tier features different premiums, deductibles, copays and out-of-pocket limits, catering to people who prefer to pay higher monthly premiums for more extensive coverage and those whod rather pay a lower monthly premium and risk higher coverage costs in the event that they need to seek care. Employers have flexibility in which type of plans they choose to offer their employees.
Best Option If You Have Have To Offer Health Insurance To Employees
A couple of considerations before we jump into the option.
Okay…so based on those three points, here’s the plan.
We first run a quote across all carriers at the Silver or Bronze level to seewho is priced best for your company’s situation.
There are even skinny network options which can reduce premiums by 10-15%.
Once we have the best priced plan at a given level , we can runworksheets for each employee.
The worksheet will show the cost to them based on employer contribution of50% towards bronze plan.
The employee can then pick and choose from any of the levels and pay thedifference with pre-tax dollars.
They will pay with pre-tax money with the POP 125.
Average savings of 25% so the realcost is $150 for the employee. They avoid a separate penalty for not havingcoverage of 2.75% of income.
At $40K salary, that’s $1000/year or $80/month.
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Does A Company Have To Offerhealth Insurance In California
It’s a good question and there’s plenty of confusion.
10,000 pages of the new ACA law requirements doesn’t help the matter.
So what are the requirements for California companies when it comes tooffering health insurance to employees?
We’ll look at what is required.
What makes sense.
And what you should absolutely avoid doing .
Of course you can always quote all major carriers side by side here at nocost to you!
What’s Best For My Company
While we always advise our clients to speak with their CPA before jumping in, we are ready to chat on our website if you have any specific questions about your business and how HRAs stack up against group plans in your area. Setting up a small business HRA or setting up an ICHRA is simple and quick, and our team is here to help if you need it.
And remember, what’s best for one company isn’t necessarily best for another. It is important to consider your company’s unique makeup, your company size, whether or not you want to participate in the health plan as an owner, and your location market conditions to determine what the best plan will be for your company benefits.
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Do Small Businesses Have To Offer Health Insurance Plans
By law, some small businesses are required to provide health insurance and some are not. Specifically, small businesses with less than 50 full-time employees are not legally obligated to provide health insurance, according to the Affordable Care Act . Since the majority of small businesses have fewer than 50 employees, most are exempt.
However, if your small business has 50 or more full-time employees, you are required by law to offer health insurance to said employees. Keep in mind that laws change, particularly when political administrations change, so make sure you have measures in place to always be up-to-date with current regulations. One of the best ways to do this is to work with a licensed, professional insurance broker.
Are Employers Required To Offer Small Business Health Insurance In 2021
While the Affordable Care Act requires employers of 50 or more employees and full-time equivalent employees to offer affordable group health insurance that includes essential benefits or pay a penalty, the ACA never required small business owners to provide group health insurance to their employees. According to the ACA requirements for employers, business owners with fewer than 50 full-time and full-time equivalent employees are considered small businesses. So, if your company falls within the small business classification, you have the option to offer group health insurance or not.
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Option : Group Coverage Hra
If you like the idea of offering a group health insurance plan, but want to help offset your employees’ out-of-pocket costs, a group coverage HRA is a great supplement. Because of their lower cost, high deductible health plans are the most frequently offered group health policy. However, theres a reason theyre less expensive: they cover less than other policies.
To mitigate some of that loss, small businesses can offer a GCHRA. With a GCHRA, the business offers employees a monthly allowance of tax-free money in addition to the group policy. Employees then choose and pay for health care and the business reimburses them up to their allowance amount.
Generally, employees use the HRA to cover expenses like copays, deductibles, and prescription drugs. All of the items listed in IRS Publication 502 are available for reimbursement, but the business can limit this list if it chooses.
Reimbursements made through a GCHRA are free of payroll tax to both the business and its employees. Theyre also free of income tax for employees.
In addition, businesses can structure their own employee eligibility requirements, as long as employees participate in the group policy.
Does Your Small Business Meet The Requirements For Health Insurance Coverage
Does Your Small Business Meet The Requirements For Health Insurance Coverage
You may be wondering if you need to give health insurance to your employees if you manage a small business. What responsibility do you have to your employees and what must be done to provide them with health insurance are some questions you might ask yourself.
No business in the United States is required to pay for insurance under the Affordable Care Act , but large businesses that fail to follow the ACA’s insurance coverage regulations will be fined by the Internal Revenue Service at tax time .
In 2018, legislation was approved requiring businesses with at least 50 employees to provide minimal major health care services to their full-time equivalent employees and their dependents. Furthermore, they were required to pay a minimum of 60% of the premium.
The Affordable Care Act specifies which businesses are required to provide health insurance to their employees. Any business with 50 or fewer full-time employees is not legally obligated to provide health insurance coverage in the majority of states. Those who do so must meet the following health insurance requirements.
- Every full-time employee must have access to health insurance .
- Small firms are not required to provide health insurance to part-time employees .
- If one part-time employee is provided with health insurance, other part-time employees must be provided with the same coverage.
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Individual Market Qhp Issuers Were Allowed To Stop Offering Shop Plans In 2018
The decline in SHOP participation was due in part to lackluster enrollment in the early years, and also to a rule change that HHS finalized in late 2016. Under the new rule , insurers that offer individual market coverage through HealthCare.gov are no longer required to offer SHOP coverage, even if they have more than 20% of the small-group market share in the state.
Prior to 2018, those insurers were required to offer at least one silver and one gold SHOP plan in order to be allowed to offer individual market coverage in the exchange. But HHS eliminated that requirement for plan years starting in 2018 or later.
Option : Small Group Health Insurance
The traditional choice of most businesses is a group health insurance policy is a plan chosen by the business that provides coverage to employees and, potentially, employees dependents. Businesses that have between 2 and 50 full-time employees can purchase small group health insurance.
Small businesses offering small group health insurance pay a fixed premium for the policy, though they may pass on a portion of the premium cost to employees. Employees are responsible for copays and deductibles associated with the services they seek.
Businesses typically purchase coverage through an insurance broker or the public Small Business Health Options marketplaces.
Traditional group health insurance can be a good choice for small businesses because it’s relatively easy to obtain and most employees are already familiar with how it works.
However, premium prices can be a challenge. The cost of traditional group health insurance is estimated to reach $15,375 per employee family in 2020 for businesses with fewer than 500 employees. This is simply out of reach for most small businesses.
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Shop Enrollment Lagged From The Start
The Small Business Health Options Program never really took off. As of 2017, HHS reported that there were fewer than 39,000 people enrolled in SHOP coverage across the 26 states that had fully federally-run SHOP platforms at that point. Hawaii was the first state to obtain approval for a 1332 waiver, and its purpose was to eliminate the states SHOP exchange as of 2017.
Arkansas, Mississippi, and Utah used to run their own SHOP platforms , but had switched to the federal SHOP platform or a direct-to-carrier process by 2019. Arkansas noted that they would no longer have a SHOP option because insurers were no longer participating in SHOP in Arkansas.
And the lack of insurer participation in SHOP has not been limited to states that use the federally-run exchange. The same thing happened in Washington state as of 2018. And Minnesota, which has a functional state-run exchange for individuals, has discontinued its SHOP platform.
It Boosts Employee Productivity
Worrying about healthcare coverage and neglecting preventative care because of healthcare costs can lead to stress and illness, both of which lower employee productivity at work. According to the Center for Disease Control, healthier employees are more productive and are less likely to call in sick for work. Offering health care coverage to employees can reduce stress levels and encourage workers to get the care they need to maintain their health and stay productive.
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How Can I Purchase A Health Insurance Plan
There is more than one way to purchase a health insurance plan. Here are the most popular for small businesses:
- Group health insurance plans: You can buy these plans through the federally run SHOP Marketplace. This was the most popular choice for small businesses in the past, but due to the high costs and lack of flexibility, this is no longer an option for many companies.
- Qualified small employer health reimbursement arrangement : Set up by Congress in December 2016, QSEHRA is becoming an increasingly popular choice for small businesses. Under this arrangement, businesses offer employees a tax-free monthly allowance, and employees then choose and pay for their own health care using that money. The advantages of QESHRA are that it gives employees the flexibility to choose their own plan and its considerably easier to manage from an administrative point of view.
- Association health plans: Small businesses can join with other small companies to buy large-group health insurance . This works in the same way as a normal group health insurance policy.
Employee Health Benefits Guide For Small Business Owners
Lets suppose you are a small business owner with 50 full-time employees that are paid at market value and bring in an average salary of $50,000 a year. You also understand how integral happy and healthy employees are to your business success. Thats why, this year, youre going to offer your hardworking and loyal employees health benefits.
The question youre asking now is, where do I begin?
On the other hand, maybe your small business has 20 full-time employees, and youre beginning to hear some rumblings that your employees are thinking of leaving if they dont get some affordable healthcare options.
Similar to the first scenario, you just arent sure where to begin.
These are dilemmas many small business owners face, so dont worry if youre confused. Between dense language and ever-changing rules, its easy to lose sight of what is required of small business employers in relation to employee health benefits. In this article, well give you an overview of what you can expect when it comes to group health insurance plans, how you can find the right plan for you and your employees, and how to implement an employee benefits package.
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Why Health Insurance For Small Business Is Important
Health insurance can be a major financial deterrent when you’re considering going out on your own. But it doesn’t have to be.
There are tax-friendly tools on the market called health reimbursement arrangements that help new business owners like you afford benefits, either for you personally or your growing team. We’ll touch on the subject later on in this post. So keep reading!
If you are planning on growing, having a competitive benefits package is key to recruiting and maintaining the top talent in a tight job market. Your company is only as good as the team you build, and it’s just common sense to ensure that those valuable team-members remain loyal. Compensation is a big driving factor, but other things like benefits and culture are also extremely important to today’s workforce.
And remember, benefits aren’t just important to ensure that your team is happy and covered, if you fail to offer competitive benefits, it can bring some serious financial consequences, not to mention the risk of losing employees you depend on to competitors.
A study by the Society for Human Resource Management shares that on average, the cost to hire an employee is $4,129, taking around 42 days to fill a position.
And if you’re replacing an employee instead of hiring for a new position, the numbers are even worse.
What Do Small Business Owners Need To Know About Health Insurance Requirements
Some businesses are required by law to provide health insurance, while some are exempt. Well dive into these exemptions below, but there are basic requirements when it comes to providing health insurance to your employees.
Firstly, when you provide a health insurance plan, it must meet the benefit, coverage, and affordability standards set out in the ACA. You also have to offer all eligible employees some form of health insurance within the first 90 days of their employment.
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Best Overall: Blue Cross Blue Shield
Blue Cross Blue Shield
- No. Policy Types: Varies from state to state
- No. States Available: 50
As one of the largest health insurance providers in the country, Blue Cross Blue Shield offers ample coverage options for most small business owners. It also offers data-driven healthcare solutions to enable cost-effective options for many companies. It’s the insurance company for those who need flexible options.
Limited health plan details on BCBS website
Must contact a sales representative
Mixed reviews on ConsumerAffairs
Blue Cross Blue Shield is a nationwide association of 36 independent insurance companies. The association has been around since 1929, and most of its companies have received high ratings from AM Best. The companies earned overall ratings of 2.5 to 4.5 on a scale of 1 to 5 from NCQA.
BCBS companies also ranked highest on eight of the 21 award-eligible regions on the J.D. Power 2021 U.S. Commercial Member Health Plan Study.
BCBS provides coverage in all 50 states, plus Washington, D.C., and Puerto Rico, and works with over 90% of the nation’s hospitals and doctors. The company also underwrites international coverage in over 190 countries through BCBS Global. The company’s large network seeds the data for innovative healthcare solutionslike the ability to compare costs for over 1,600 proceduresmore than any other insurer.
Employer Shared Responsibility Provisions
The Affordable Care Act includes a penalty that is imposed on certain employers if they don’t provide health insurance coverage to employees and their dependents. This is officially entitled the Employer Shared Responsibility Payment, but is sometimes referred to as the employer mandate. “Beginning in 2015, those employers with 100 or more full-time or full-time equivalent employees who do not offer affordable health insurance that provides minimum value to their full-time employees may be required to pay an assessment if at least one of their full-time employees is certified to receive a Premium Tax Credit in the individual Health Insurance Marketplace. Under these rules, a full-time employee is one who is employed an average of at least 30 hours per week. For employers with 50-99 full time/full-time equivalent employees, these rules will not apply until 2016 provided employers of this size meet certain certification requirements.”
- Questions & Answers: Employer Shared Responsibility Provisions Under the ACA
- Final Regulation: Shared Responsibility for Employers Regarding Health Coverage
- Definitions and Employer Size Determinations: The U.S. Small Business Administration has prepared information to assist employers in determining the number of full-time or full-time equivalent employees.
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