Under the Affordable Care Act (ACA), only businesses with more than 50 full-time employees are required to provide health insurance for said employees. However, even businesses that are not required to provide insurance should consider doing so anyways, as offering health insurance is a good way for small businesses to attract and retain talent.
There is a wide selection of insurance types available on the market for small business owners, from individual insurance to the Small Business Health Options Program (SHOP), but being spoilt for choice can be a double-edged sword, as making your final selection becomes difficult. Here are some things to keep in mind when purchasing small business health insurance:
- Providing insurance to your employees is not equivalent to paying for it. However, if the cost to the employees exceeds 9.96% of their salary, you will be subjected to penalties. All that being said, having your employees pay for their own insurance is not a very good incentive for them to continue working at your company.
- Paying for your employees’ health insurance makes you eligible for tax benefits. Not only can you can take a take deduction on the health insurance premiums that you pay, but you may also be eligible for the small business health care tax credit. Together, they can cover a good portion of your expenses.
- The needs of your employees are paramount. It is important to take into consideration your employee base before selecting health insurance. For instance, if you are primarily employing younger workers without dependents or spouses, you can often get away with providing a low-cost option such as a Flexible Spending Account (FSA), which is more of a tax-free savings account for health expenses than a traditional “insurance.”
- The SHOP marketplace provides government-sponsored coverage options. The Small Business Health Options Program is an insurance marketplace provided by the federal government specifically for employers. This “safe” option is guaranteed to be in compliance with government regulations, though the system is still a work in progress and the offered plans can be prohibitively expensive in some states.
- Individual coverage remains an option. Rather than opting for traditional group insurance, many employers choose to simply offer employees a one-time “raise” to purchase their own health insurance. This gives employees the freedom of choice and can be cheaper than purchasing group insurance.
- The QSEHRA is an alternative to group insurance. The Qualified Small Enterprise Health Reimbursement Arrangement is a new option in the small business insurance market: an ACA-compliant, tax-free, employer-funded health benefits plan available to companies with fewer than 50 employees that do not offer a group insurance plan to their employees.
- Your location should influence your choice. Insurance options significantly vary from state to state. In addition, your method of purchasing health insurance could differ depending on whether your business is based in a big city (where insurance brokers are plentiful and can provide quality personalized service) or a small town (where internet-based insurance providers may be your best bet).
It should be noted that the future of the Affordable Care Act is somewhat up in the air under the new Republican administration. Both the legislation regarding small businesses and health insurance and the insurance options available may therefore change drastically. It is therefore crucial for small business owners to remain informed on the matter. Head to HealthQuoteInfo.com to find affordable insurance for your employees and to follow the latest news in the insurance business.