Hire An Insurance Broker
Hiring an insurance broker may be an expense, but it can save you significant amounts of time and effort in searching for an insurance plan that works for you and your business. An insurance broker will help you with paperwork, ensure your business is compliant with relevant laws, get you plans with up-to-date policies, and help with implementation and renewals.
Brokers will earn a commission once they find a plan that works for you, but they should not ask for money upfront avoid any brokers that do.
How Can Organizations Control Their Health Benefits Costs
Unsurprisingly, many small organizations decide they cant afford these costs. But simply going without health benefits isnt the answer, as the increase in employee turnover and associated costs are even higher.
Many small organizations are finding that HRAs are one of the most effective ways to offer a quality health benefit that fits a tight budget. With an HRA, instead of paying premiums, the organization offers employees an annual or monthly allowance the organization can afford.
Employees get reimbursed, tax-free, for individual insurance premiums and qualifying out-of-pocket medical expenses up to the maximum allowance. The employer controls their health benefits costs, and employees typically have far more insurance plans to choose from, allowing them to purchase a plan that works best for them and increasing their satisfaction in the health benefit.
Best of all, unlike group health insurance plans that require hours of administration, HRA administration software like PeopleKeep enables the plan to be managed in minutes per month.
How Much Do Group Health Insurance Premiums Cost
According to the Kaiser Family Foundation, annual group health insurance premiums average at around $7,470 for single coverage and $21,342 for family coverage.
67% of small organizations , paid between 25% and 50% of the family coverage premiums, which comes to about $455 to $910 per month.
Premiums run higher for certain plan types, like preferred provider organization plans and health maintenance organization plans. Premiums are also more expensive in the Northeast and Midwest regions of the United States and in certain industries like transportation, communications, and utilities.
Of course, organizations can reduce their budget by implementing higher cost-sharing requirements on employees. However, adding these requirements increase the risk that eligible employees will decline participation in the plan. If too many employees choose not to participate, the organization may not be able to offer the policy at all. Most states require that at least 70% of employees participate in a group health plan.
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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:
Buying Group Health Insurance With Employees
If you have at least one employee , you can buy group health insurance through an agent, directly from an insurance company, or through the public exchange. Basically, you have more options for how you can buy a group health policy when youre a self-employed business owner with employees.
Anther option is a stand-alone health reimbursement account . This is an employer-funded account from which you can be reimbursed tax-free for qualified medical expenses. There are several types of HRS, including the Individual Coverage HRA available to businesses of any size, and the Qualified Small Employer HRA , available to business with up to 49 employees.8,9 These two types of HRAs are considered an alternative to job-based health coverage, and require enrollment in a health plan for the money to be used.10
For a QSEHRA, the business owner sets an allowance for the QSEHRA, then employees maintain minimum essential health coverage and submit their medical expenses for tax-free reimbursement. Employees can be reimbursed up to $5,300 per year for individuals and up to $10,700 per year for families.11
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How To Get Health Insurance For A Small Business
You have several options when it comes to searching for the right plan options for your small business:
- Do your own footwork. Small business owners can sort through options from different insurance companies to compare prices and services and enroll in a plan that meets their needs. Most health insurance companies offer a number of plans for small businesses. By plugging a minimal amount of information into forms on their websites , you can see plan choices and costs.
- Work with an insurance broker. Insurance brokers know the ins and outs of health insurance plans, as well as state and federal requirements. We can compare the plans and figure it all out for you, says Jugan. Its an administrative burden and we can alleviate that. Insurance is complicated, and a lot of small business owners dont want to think about it. He adds that you dont pay any fees for using insurance brokers, as their costs are covered by insurance companies. Just be sure youre working with an independent or agnostic broker who will show you all plans available to you to best meet your needs.
- Explore the SHOP Marketplace at healthcare.gov for expert guidance, helpful calculation tools and clear choices for high-quality group insurance plans.
Can An Llc Deduct Health Insurance Premiums
Getting a health insurance LLC deduction depends on whether the deduction is being taken out for non-member employees or members of the LLC, as well as the legal and tax status of the LLC and whether the LLC is classified as a sole proprietorship, partnership, or corporation. According to LegalZoom:
- For non-member employees An LLC can deduct the cost of medical insurance for all employees who are not members of the LLC. This deduction can also include the amount the LLC pays for employees to have qualified long-term health coverage.
- For the self-employed Members of an LLC are considered self-employed if their LLC is a sole proprietorship or partnership. While self-employed business owners can deduct the cost of acquiring health insurance for themselves, a spouse, and qualified dependents, they may or may not be able to qualify for small business health insurance. For example, sole proprietors usually would not qualify for a group plan unless they have employees, but a sole proprietor could still enroll in an individual health insurance plan.
- For corporations If shareholders of an LLC receive corporate tax treatment, they would not be considered eligible to receive health insurance from the business unless they are bona fide employees. If a corporation provides health insurance to non-employee shareholders, then the company could not take this deduction on their corporate tax return.
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Am I Required To Provide Health Insurance For My Employees
Under the Employer Mandate, the Affordable Care Act requires that all employers with more than 50 employees must offer health insurance that’s affordable.
To find out if the rule applies to you, you first have to figure out how many full-time equivalent employees you have on your team. Use the formula below to calculate your FTE number. + # of full-time employees = Your FTE number). If you have 49 FTE, you technically aren’t required to offer insurance If you have 50 FTE, 95% of your full-time workforce must be covered. But there are a lot of other reasons to offer health insurance – like keeping your employees healthy and boosting recruitment and employee retention.
Kaiser Family Foundation reports that 56% percent of small firms and 99% of large firms offer health benefits to at least some of their workers, for an overall offer rate of 57%.
Compare Small Business Health Insurance Plans
BeWellnm for Small Business offers competitively priced health plans that cover essential health benefits, as well as preventive care, with no pre-existing condition restrictions.
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If You Have An Employee You May Want To Consider
I say this lightly because it can sometimes be more expensive than other types of health insurance. But you should look at the costs of Group Insurance if you have 1 or more employees. What is good about Group Insurance is: it doesnt depend on personal medical history.
Another consideration is QSEHRA which stands for the qualified small employer health reimbursement arrangement. With the QSEHRA, all reimbursements are free of payroll tax for the business and its employees. Reimbursements can be free of income tax for employees, took if the employee is covered by a policy providing minimum essential coverage.
You May Want To Consider A Broker
But wont this cost more?
Yes and no!
Brokers do charge commissions but, the amount of time and energy you can save can offset that commission.
Brokers assist with all the paperwork, make sure your business is compliant with all relevant laws, ensure you land on plans with the most up-to-date policies, and help with renewals.
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Option : Reimburse For Health Insurance With An Hra
What is an HRA?
A health reimbursement arrangement is an affordable, tax-advantaged alternative to traditional insurance where employers reimburse their employees for individual insurance premiums and medical expenses on a pre-tax basis.
Unlike Health Savings Accounts and Flexible Spending Accounts that are accounts, HRA stands for Health Reimbursement Arrangement, meaning that the model operates on reimbursements. Employees will pay the insurance company or doctors office directly and then submit a claim to get reimbursed for their expenses tax-free.
The use of new reimbursement models of HRAs put the employer’s reimbursements on nearly the same tax playing field as traditional small group plans, but without all the hassles and requirements. Before, a big advantage for group plans was that they were deductible expenses for employers and were taken out of employee paychecks on a pre-tax basis. With an HRA, employers can make reimbursements without having to pay payroll taxes and employees dont have to recognize income tax. In addition, reimbursements made by the company count as a tax deduction.
How an HRA works
HRAs that work best for health insurance for small business
There are a few different kinds of HRAs that are worth noting.
QSEHRA: To cut quickly through the insurance jargon , a QSEHRA allows small employers to set aside a fixed amount of money each month that employees can use to purchase individual health insurance or use on medical expenses, tax-free.
What Are Small Business Health Insurance Requirements Related To Tax Reporting In 2021
If you decide to offer group health coverage to your employees, be mindful of certain tax reporting requirements for small businesses in 2021.
- You must report the value of the insurance provided to each employee. This information goes on the employees Form W-2 using the code DD, as per IRS requirements.
- IRS requires your business to withhold and report an additional 0.9 percent on employee compensation that is greater than $200,000, as per the ACA.
- Your small business also must pay a fee toward funding the Patient-Centered Outcomes Research Trust Fund. You are required to report this fee through Form 720.
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Can I Get Health Insurance Through My Llc
As a small business owner, you may be wondering whether you can get small business health insurance through your LLC. The short answer is that while you usually cannot get small business health insurance through your LLC, you can still enroll in individual health insurance coverage for yourself.
You can generally deduct the cost of individual health insurance from your taxes as a self-employed LLC member, although this ultimately depends on several factors, including the tax classification of the LLC and for whom the deduction is being taken out for.
Continue reading to learn about how health insurance works for LLCs.
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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Types Of Health Insurance For Small Business Owners
In the United States and in most countries of the world, you cant operate a business without having some of the basic insurance policy covers that are required by the industry you want to operate from. Insurance basically is a means of protection from financial loss. It is a form of risk management, primarily used to hedge against the risk of a contingent or uncertain loss.
Interestingly, in the United States of America, there are quite a number of health insurance policy covers that are specifically designed for small business owners and some of these insurance policies can be tailored to specific industries while some can be general.
In this article, we are going to be looking at the various types of health insurance policies that a small business needs in order to operate full-swing.
How Does Cobra And Missouri State Continuation Work
The Consolidated Omnibus Budget Reconciliation Act applies to groups with 20 or more full-time employees. COBRA allows a terminated employee the right to continue enrollment under the group health plan for a period of 18 months. The termination can be voluntary or involuntary however, involuntary termination due to misconduct may negate the employees right to COBRA coverage. The employer is responsible for notifying the terminated employee of their COBRA rights within a specified timeframe. Certain qualifying events, such as disability, may allow a terminated employee to extend their COBRA benefits past the 18 month time limit. There are also special provisions for dependents/spouses of terminated employees based on the reason for loss of coverage . More information on COBRA is available by visiting the US Department of Labor website.
Missouri State Continuation applies to groups with less than 20 full-time employees. State Continuation mirrors, for the most part, federal COBRA. The specific provisions for State Continuation are outlined under Section 376.428 RSMo.
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You Protect Your Financial Health
For those of you who think you can just pay out-of-pocket because you normally dont have medical issues, consider
- When you are insured, insurance companies negotiate rates with health care providers. You wont get those discounted rates paying out-of-pocket.
- Tax penalties are still in effect. If you maintain medical coverage, you will not face tax penalties put in place under Obamacare.
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How Much Does Health Insurance For Small Business Cost
The cost of health insurance for small business should be measured in both dollars and in time.
If you’re going with a group plan, you’ll want to consider the percentage of premiums you are willing to cover, whether or not you are covering employees or their families as well, whether you use third-party services to find insurance for you, since they have a fee as well. But it also takes time to search and compare plans that meet the needs of your business, to educate your team on their plan options, and the administrative burden of setting up and maintaining the plan. And did we mention paperwork? So much paperwork.
More specifically, according to the 2019 Employee Benefits Survey by Kaiser Family Foundation, annual premiums for employer sponsored family health coverage reached $20,576 in 2019, up 5% from the previous year, with workers on average paying $6,015 toward the cost of their coverage. The Wall Street Journal reports that employers shouldered 71% of that cost, while employees paid for the rest. The average deductible among covered workers in a plan with a general annual deductible is $1,655 for single coverage.
Pro tip: The best way to budget for health benefits is either a percentage of your payroll or a monthly per-employee amount.
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