Health Insurance For Small Business With One Employee

Keely S.

If you are a small business with only one employee, you’re going to want to find the best small business health insurance option to cover your health needs. There’s a few routes self-employed individuals can go here, but make sure you choose an option that helps you from a tax standpoint and is budget-friendly. Let’s check out the best options for health insurance for small business with one employee.

Whether you’re a freelancer, consultant, independent contractor, or other self-employed worker who doesnt have any employees, you’ll need to add health insurance to that long list of “to dos” you have as a business owner.

Since you’re self-employed, you’re likely either a sole proprietor or a single-member LLC. Sole Proprietorships are awesome because, well, youre doing your own thing! It can get a little tricky though because theres no separation between you and your business in the eyes of the IRS and owners are generally not considered to be employees even if youre working for your company full-time. This includes Sole Proprietorships and Single-Member LLCs that did not elect corporate taxation..

Even if we’re just talking about health insurance for you as a self-employed individual, it’s incredibly important to play your cards right from a tax perspective, find a plan that will work for your budget, and to set yourself up for growth if you add members to your team moving forward.

Where To Find The Right Coverage

For finding the right coverage, some can use SHOP to source and sign up for employee health insurance plans. But, for others, its not as straightforward. While anyone can use SHOP, there are a few other options open to employers with 50 or more FTEs. Here are those options:

Compare Business Insurance Quotes

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Business insurance protects business owners of all sizes from potential losses as a result of unforeseen events that can occur during day-to-day operation of your business, this includes property damage, injuries, theft, or even tech errors. The most common types of business insurance are commercial property insurance, general liability insurance, and professional liability insurance .

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Unitedhealthcare Can Help You Build A Healthy Business

For a small business, health insurance is a critical factor in retaining and recruiting employees, as well as maintaining productivity and employee satisfaction. UnitedHealthcare offers a wide range of group health insurance options designed to help your small business save money and support your employees health and wellbeing.

Best For Customer Service: Humana

Humana

Humana is one of the best health insurance providers for small business owners because of its top-notch customer service with readily available associates to answer questions quickly. It also has a large provider network with ample options for flexible deductible and premium combinations, providing businesses with the flexibility to find what they need.

• Not available in all states

• Some costs potentially higher for flexible spending accounts

• Limited coverage and smaller network

Humana is one of the nation’s largest insurance companies for individual plans and Medicare options and offers group medical coverage for small businesses in 18 states. The company began in 1961, has been providing health insurance since 1984. They have earned an A- rating from AM Best and received 2.5 to 4.0 overall ratings on a scale of 1 to 5 from NCQA. Additionally, the company ranked high in J.D. Power’s 2021 U.S. Commercial Member Health Plan Study.

Humana works with millions of medical and specialty partners throughout most of the country. Humana’s network is 350,000 medical providers and 3,000 hospitals.

Humana has five plans for small and large businesses:

Depending on where you live, the cost of these plans may vary. Humana also has a “level-funded premium” cost-saving option for small businesses with up to 100 employees. You can learn more online or call a representative for details.

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What Types Of Plans Are Available For Small Businesses

There are several types of health insurance plans a small business owner can purchase. Some plans provide comprehensive major medical coverage, while others provide a very specific, or significantly limited, amount of benefits. The various plans include:

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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As A Small Business Owner Are You In Need Of Health Insurance

As a small business, it’s important to assess your needs for health insurance plans for employees. Many times, providing access to coverage is a big benefit to employees and one they appreciate. If your company has 50 or more employees, finding affordable health insurance options is essential, especially if you plan to cover some or all of the costs for employees. Even companies with fewer than 50 employees benefit from health insurance coverage, especially if employees want it.

How To Get Insurance For Your Small Business: Smart Tips For Better Coverage

Small businesses need insurance coverage to protect them against risk and financial loss. Small business owners need to do their research to determine the types of insurance they need and to find the best policies for their business model. Small business insurance is crucial for protecting your business and personal assets in the event of an unexpected catastrophe.

Learn how to get insurance for small business and find the coverage you need with these topics:

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What Is An Applicable Large Employer

Under the ACA, an applicable large employer is defined as any business that employed fifty or more full-time equivalent employees for six months or longer in 2017.

To determine if your business meets the criteria of an ALE, you need to count your full-time employees as well as the full-time equivalent of your part-time employees.

• Full-time employees: Are defined as working an average of at least 30 hours per week in a given month. Youll need to count up all your full-time employees.
• Full-time equivalents: To calculate the full-time equivalent of all your part-time workers, add up the total number of hours worked by part-time employees in a given month, then divide the total by 120.

If the combined total of full-time employees and full-time equivalents is fifty or more, your business is considered an applicable large employer.

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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How Much Money Do Small Businesses Spend On Health Insurance

Several studies show that small businesses spend an average amount on health insurance, according to a report by the Kaiser Family Foundation, of which employers contribute $6,297, or 84 percent. Employers contributed $13,618 or 67% towards family coverage, which amounts to $20,438, or $20,538, for single coverage.

Understand The Cost To Offer Health Insurance

Working with an insurance broker, PEO or private health exchange will give you an easy way to determine your costs. These organizations will need to provide that information. Keep in mind that any amount you pay towards your employees health insurance plan is tax deductible. So, it literally pays to offer your employees health insurance.

In general, most employers pay at least 50% of their employees health insurance premiums. And, since its tax deductible and allows some small businesses to apply for a tax credit, paying this amount is well worth it.

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How Do I Purchase Group Health Insurance For My Small Business

There are various means by which a small business employer can shop for group health coverage. Some of those include:

• Agent/Broker: There are two types of agents/brokers – those that can only sell for one carrier and those that can sell for multiple carriers . A captive agent can only provide quotes for plans sold by the carrier they represent. Independent agents can provide multiple quotes from multiple carriers. Various factors can determine which agent would be best for your group.
• SHOP: The Small Business Health Options Program was created in conjunction with the Affordable Care Act and provides an online medium for small business owners to search for and purchase group health insurance. You can visit for further information on the SHOP and/or to search for and purchase group health coverage.
• Carrier: Insurance carriers maintain websites through which, typically, you can search for and purchase their health insurance products. Some carriers will allow you to conduct the quoting and enrollment process online however, some may require you to call the carrier directly. An enrollment/eligibility specialist will then assist you through the process of purchasing a health insurance product.

Before purchasing, interview several licensed insurance agents who specialize in serving the health insurance needs of small businesses.

Can Business Owners Buy A Plan On The Marketplace

As a small business owner, you have two health insurance options through Healthcare.gov, a.k.a. The Marketplace. If you are a sole proprietor, you may purchase an individual health insurance plan. Your options may include bronze, silver, or gold plans with a range of monthly premiums, deductibles, and coverage.

You may also qualify for the Small Business Health Options Program if you have one to 50 full-time equivalent employees. If your company has fewer than 25 full-time employees who meet the maximum income threshold , you may be eligible for the Small Business Health Care Tax Credit. In this situation, you must offer SHOP to all of your full-time employees and pay at least 50% of their premium cost.

This tax benefit credits 50% of all premiums paid on company tax returns. Since these are IRS guidelines with amounts changing annually, based on inflation and other factors, it is best to check with your tax advisor on eligibility.

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Can I Only Extend Group Health Insurance To My Family Members

Even though you mightcall your small business a family business, you still may employ people whoarent related to you.

Keep in mind that withhealth insurance, playing favorites in any small business isnt allowed. Youmust offer health insurance to not only your employed family members but yourqualifying employees who are not related to you.

According to the Societyfor Human Resource Management, when you offer a group health insurance plan toyour full-time employees, all employees in that category must be offered thesame amount of benefits.

You must offer all youremployees the same benefits whether or not they are family members.

Although you cannotexclude full-time employees from your group health insurance plan, youremployees do not have to join the group plan.

Reasons for this could bethat:

• They get health insurance from a spouse
• They wish to buy their own individual insurance
• The employee has health insurance from a government-sponsored program

What Do Employers Need To Communicate To Their Employees If They Offer Small Business Group Health Insurance

If you decide to offer small group health insurance, you will need to provide your employees with specific information about the Marketplace health insurance offering:

• Who qualifies to participate in the companys group health plan. Small business employers are required to offer full-time employees the health coverage. Full-time means the employee works on average at least 30 hours per week. You are not obligated to offer coverage to employees family members but should disclose whether or not dependents may be covered by your companys plan.
• If you have new hires and you are uncertain whether they will work full-time, you are permitted to have a wait period, usually no more than 90 days from date of hire, to determine if the new hire is eligible to participate in the plan. Your employee communications should include a description of this wait period, if applicable.
• Benefits covered by your group health insurance plan. You must provide employees with a standard Summary of Benefits and Coverage form explaining what their health plan covers and what it costs. The purpose of the SBC is to help employees understand their health insurance options.

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What Is The Plan Type

Health insurance is not a one-size-fits-all proposition. A variety of acronyms make up your choices: HMO, PPS, POS and EPO. The general consensus is that the HMO plans are the budget option, while PPOs are the BMW of plans. POS and EPO plans fall somewhere in-between the two. More details can be found here.

Option : Qualified Small Employer Hra

If youd like to get away from offering traditional group health insurance all together, a QSEHRA is a formal, IRS-approved benefit for employers with fewer than 50 full-time equivalent employees that doesnt require you to offer a group health insurance plan along with it.

A QSEHRA works much like an ICHRA, with a few exceptions. Unlike an ICHRA, employees dont need to be covered by a qualifying individual health insurance policy in order to participate, but reimbursements will be free of income tax for employees if the employee is covered by a policy providing minimum essential coverage .

Also unlike the ICHRA, QSEHRAs come with annual allowance caps that employers cant exceed. A QSEHRA is often the best choice for small businesses because it allows for complete personalization. Employees can purchase what best fits their needs, while employers are free to set their own budget.

QSEHRAs also offer value to small businesses in unique situations, such as those with employees who are covered under a spouses or parents group policy, and even those with employees without insurance.

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The Federal Government Requires Companies To Mandate The Vaccine

Even before Biden’s COVID-19 vaccine mandate, US employers could require employees to be vaccinated during pandemics under federal law.

The Biden administration issued new requirements for all companies with 100 or more employees to ensure they are either fully vaccinated or produce negative test results at least once a week. The rule could give employers the option of making unvaccinated employees pay for the weekly testing, Bloomberg Law reported.

Because it’s federally mandated, the Department of Labor will require employers to give workers paid time off to get vaccinated. This includes time to get the shot and sick time to recover from any side effects.