Know The Rules About Offering Health Insurance
When it comes to healthcare benefits for employees, the rules for small businesses are actually pretty straight forward. Youre required to offer your employees health insurance if you have 50 or more FTEs . Additionally, the health insurance you offer must be considered affordable for your employees. In nuts and bolts, that means that the health insurance benefits must not cost employees more than 9.86% of their annual income. In general, thats not a hard bar to clear.
If your company falls into the above category, then youve got your marching orders. However, if your company is structured differently, then youll need to make other considerations. For example, if you only have 20 full-time employees, you arent required by law to supply your employees with health insurance benefits however, if you do, youre eligible for a tax credit.
Here is an overview of how a small business can qualify for a tax credit when offering employees health insurance:
- Have 25 or fewer FTEs
- Offer health insurance to all full-time employees
- Pay your FTEs an average of $50,000 a year
- Pay at least 50% of the health insurance costs
Does My Small Business Even Need Health Insurance
It may have crossed your mind that your business is so small that you do not need to offer health insurance through your business or the cost of offering health insurance is too expensive. Whats the right answer?
The short answer is yes, your small business should offer health insurance. Not only is health insurance important for covering unexpected expenses such as dental and chiropractic services, but it enhances the morale of your business. Small businesses who offer employee health benefits attract candidates who are better qualified and have a higher rate of employee retention. These days, the health benefits offered by employers can be just as important as the hiring salary. Offering health insurance doesnt just benefit your employees, but will also benefit you, the owner, as you will partake in the same health care plan as your employees, as opposed to paying for private insurance or paying for medical expenses out-of-pocket.
Now, that you know why you need health insurance, how do small business owners obtain coverage for health expenses? They can either choose between traditional small group insurance plans or a non-traditional alternative, health spending account. Lets take a look at both options.
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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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.
Best For Preventative Care: Kaiser Permanente
- No. States Available: 8 states and the District of Columbia
- Providers In Network : 23,200+
Kaiser Permanente’s long history of quality customer service and its comprehensive website with ample educational resources makes it a good choice for many. More so, we recognize the company’s aggressive preventative healthcare services that aim to keep employees healthy longer.
Strong emphasis on preventative care
Detailed plan information on website
Only available in eight states plus Washington DC
Slow mental healthcare treatment
Kaiser Permanente is a leading healthcare provider and nonprofit health plan. The company was founded in 1945 but doesn’t currently have a rating with AM Best. It gets 3.5 to 5 ratings on a scale of 1 to 5 from NCQA. Kaiser ranks highest for four of the 21 award-eligible regions on the J.D. Power 2021 U.S. Commercial Member Health Plan Study. Kaiser ranked highest in customer service for health insurance companies on Newsweek’s Best Customer Service Companies in 2021.
Kaiser Permanente’s coverage isn’t perfect, though. As California’s largest insurer, the company has faced a number of state sanctions and fines for delaying mental healthcare to members. The Los Angeles Times reported in December of 2019 that many people were still struggling to get timely care.
Kaiser’s small business insurance plans focus on companies with two to 100 employees. There is a total of six plan options, with varying costs by state:
Use Shop The Governments Health Insurance Exchange
With the passage of the Affordable Care Act, the federal government mandated that each state set up a âhealth insurance exchangeââor, in other words, an online marketplace with easy-to-understand data points about various health insurance providers. States have some flexibility in exactly how they provide the information and allow for plan access, but each state must have a service to help individuals, families, and businesses purchase affordable health coverage.
These health insurance exchanges are available for individuals and families, but also for group health insurance plans for small businesses. SHOP, or the small business health options program, is the federal health insurance exchange database. Buying health insurance on SHOP can you get health care tax credits of up to 50% of premiums.
Use SHOP to locate your state-appropriate health insurance exchange and filter through personal and family health insurers, small business health insurance providers, and health insurance brokers. Itâs a convenient and usable system for small business owners and brokers alike.
Employers can choose between various tiered categories for the health insurance plans they select, each with their own set of minimum benefits outlined by the government. Each health insurance plan comes labeled as bronze, silver, gold, or platinum, indicating pricing structures from low monthly premiums but high copays to the opposite .
Beware Of Alternative Types Of Health Insurance Or Outright Fakes
Medical discount plans are not insurance
These plans claim to offer discounts for members who use certain doctors, pharmacies and hospitals. Verify these claims with those providers before buying.
While these plans are not insurance, they are regulated by the department. Call our Insurance Consumer Hotline to verify the plan is registered as required by Missouri law.
Bogus health plans
You may see ads on late-night TV, in spam or in junk faxes offering unbeatable low prices on group health coverage. Many of these are unlicensed, illegal operations. You can find out if these companies are legitimate with a quick phone call to our department. As with most products, if a deal sounds too good to be true, it probably is.
Does Your Small Business Really Need Health Insurance If Youre The Only Employee
If you are the owner and sole employee of your business or if it is just you and your spouse owning and operating the business, do you really need health insurance through your business? Even though you only need health insurance for your family, it is still advantageous for your small business to provide health insurance.
Having health insurance through your business will save you a great deal of money in the long run. For starters, having company-provided insurance means premiums and claims are paid pre-tax which means you arent taxed on the premiums you pay for your businesss health insurance. Secondly, carrying health insurance through your business means you dont have to pay for covered medical expenses out of your personal bank account.
Use A Professional Employer Organization
Professional employer organizations are similar to purchasing alliances in that they also group multiple businesses together to bring down the cost of each businesss health insurance offerings. The difference is that PEOs often assist with more than health insurance. They often handle other administrative tasks as well, such as managing payroll, recruiting, and filing taxes.
As with health alliances, PEOs pool together the purchasing power of multiple small businesses, so youre likely to get a better rate compared to going directly to a broker or health insurance company.
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S To Getting Better Insurance As A Small Business Owner
What can small business owners do to get decent coverage that isnt terribly expensive? There are several options:
Entering the Full-Time Workforce
If you find the options available to small business owners to be underwhelming, or if you want a more comprehensive, reliable, or inexpensive policy, you may consider joining the workforce full-time again.
What to Look for in an Insurance Policy
Matt Hands Business Director Of Insurance
Matt started his professional career at CARPROOF where he honed his marketing and analytical skills for over 3 years. Matt then took his wealth of experience to Ratehub.caâs Toronto offices, working with insurance providers, agents, and brokers to grow and expand the Insurance business unit. He is a thought leader in the community and a valuable insurance resource to respected publications like the Globe & Mail, Toronto Star, Huffington Post, Yahoo News, and 680 news radio in Toronto.
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.
Ner With Purchasing Alliances Or Associations
Also called private health exchanges, purchasing alliances are mini-marketplaces that bring small businesses together and allow them to purchase health insurance as a group. Since multiple businesses are in the pool, costs decrease for everyone.
Instead of landing on a single one-size-fits-all plan, you can offer your employees a few different choicesâand they can select whatever works best for their budgets and health needs. Theyâll have more purchasing power, and you get to choose what percentage of their medical coverage you want to cover. As a result, your employees will have different premiums and copays depending on what kinds of coverage they elect forâbut your health insurance cost will remain the same.
While purchasing alliances are great for employee choice, you wont enjoy the wide selection and tax credits that come from purchasing insurance on SHOP, the governments health exchange.
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Best For Plan Options: Cigna
Cigna offers a good range of small business health insurance plans to accommodate most small business needs, including flexible premium and deductible options. While it’s only available in 10 states, it has an impressively detailed website, good customer service, and a large provider network to support it.
Mixed ratings on ConsumerAffairs
Founded in 1792, Cigna has earned an A rating with AM Best. Cigna received 2.5 to 4 overall ratings on a scale of 1 to 5 from NCQA. The company received the highest ratings in four of the 21 award-eligible regions however, they also received several below-average ratings in the J.D. Power 2021 U.S. Commercial Member Health Plan Study.
Cigna is a global company with 180 million customer and patient relationships in more than 30 countries. The companys network includes 1.5 million relationships with providers, clinics, and facilities. It is licensed to underwrite health insurance plans in Arizona, Colorado, Florida, Illinois, Kansas, Missouri, North Carolina, Tennessee, Utah, and Virginia.
Cigna offers small business health insurance in these states for companies with more than 50 employees. Administrative services for self-funded plans with as few as 25 employees are also available.
Cigna offers the following group health insurance plans:
The costs vary depending on where you live. You will have to speak with a local representative for complete plan details.
Small Group Insurance Plans
Small business owners often run into problems finding insurance companies that will cover their business because the number of employees is not large enough to meet minimum plan requirements. Small group insurance plans are traditional insurance that is a viable option for small businesses. They are designed for small businesses that do not have a large staff. The medical expenses covered are dependent on the specific plan chosen by the employer. The employer chooses who pays the premium.
There are three choices when it comes to payment of the premium. The first option is that the employer can pay the entire premium. The second option is for the employee to pay the premium pre-tax. The third option is that the employer pays a portion of the premium and the employee pays the remainder. The portion of the premium paid by the employee is typically deducted from the employees paycheck both before taxes are taken out and the employee receives their pay. This means employees do not have to worry about handling the payment of their premium.
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Review Tax Credits For Your Business
If you qualify for the Small Business Health Care Tax Credit, you may get a break on the costs you pay for group health insurance. You may be eligible for a tax credit if:
How Do I Know If My Business Qualifies For An Hsa
The good news is that qualifying for an HSA is straightforward. If you own a business that pays income taxes, then your business qualifies for an HSA. Your small business can even qualify for participation in an HSA if you are the owner and your only employee is your spouse. HSAs are a great option for even the smallest of businesses.
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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:
The Employer Decides How Much To Contribute For Premiums
For small businesses, there are no minimum contribution amounts for employers. This creates a valuable opportunity to offer a benefit that even large companies have trouble affording.
In many states, businesses split the cost of a group plan with the employee. This can be 50/50, 70/30, or however youd like to structure it. Many businesses agree to pay a flat dollar amount towards the premium, and the employee pays the remainder.
Just keep in mind that everything you contribute towards employee premiums is tax deductible. This is why health insurance offers are an effective alternative to base wage increases.
Reporting Information On Health Coverage By Employers And Insurance Companies
The health care law requires the following organizations and some other parties to report that they provide health coverage to their employees:
- Certain employers, generally those with 50 or more full-time and full-time equivalent employees
- Health insurance companies