You have worked hard to build your business, and it is time for you to reinvest in your employees. There are many factors to consider when you select a health insurance plan for your small business. Health insurance laws and insurance plans change annually. There are also many options to choose from. Certainly, it can be quite confusing.
There are 4 common questions that small business owners should consult about when establishing a health insurance benefit.
Is group health insurance required by law?
There is no law requiring small business owners to provide health insurance. The Affordable Care Act (ACA) makes substantial changes that small business owners should be informed of when offering group health insurance. Large employers with at least 50 full-time employees may face penalties if they do not offer coverage under the ACA. However, small businesses with fewer than 50 full-time-equivalent employees will not be penalized if they do not provide coverage.
Is my business qualified for a group insurance plan?
Federal law requires all plans to be sold to small businesses on a guaranteed issue basis. That means small businesses cannot be turned down by an insurance company based on the health status of the group. Small businesses might be ineligible to buy coverage for other reasons. For example, insurance companies might have minimum premium contribution or participation requirements. Generally, a small business is defined as a business with 2 to 50 full-time employees. This often means, at least one owner and one full-time equivalent employee, or common law employee. A common law employee is defined as someone who works for your business with at least 30 hours per week, and who is not your spouse.
How much do I have to pay?
Some employers may choose to pay the full premium, while others require employees to pay a portion of the premium. Generally, employers are required to contribute at least 50% of the monthly premiums for each employee, while the employee contributes the remainder from his paycheck. Also, there are not specific rules about dependent coverage.
Your insurance contribution may seem expensive as a business owner, but your premium contributions are generally deductible from your business taxes. Also, it is a good way to attract and retain talented employees for your business.
When considering what portion of the premium to pay, employers should be aware that the Affordable Care Act offers small businesses tax credits to help offset the cost of insurance.
The small business healthcare tax credits have been available since the 2010 tax year, with significant changes implemented in 2014. To qualify for a tax credit of up to 50% of premium expenses for any two years, small business owners must pay at least half of employees’ healthcare premiums and have fewer than 25 full-time-equivalent employees who earn an average of $50,000 or less per year.
When can I sign up for a small business plan?
If you are qualified as a small business, you can apply for small business health insurance at any point throughout the year. You can also add new employees or remove former employees from your health insurance plan any time of the year.
When shopping for the best insurance plan, it is a good idea to talk with a broker. Your broker can show you coverage options from different insurance carriers in your area and answer your questions about your options. These services are available free of charge, and their business consulting can also save you money and time.
Skyline Benefit is an independent health insurance broker in Fullerton, California. Skyline Benefit’s small business team can assist you with reviewing your coverage options and making sure you find the best plan for your needs and budget. Call for a free small business consultation at (714) 888-5112 or email at info@skylinebenefit.com
You can also get an instant small business insurance quote.