Small businesses have unique challenges in offering health insurance benefits for employees. Small businesses are more likely to have limited financial resources, less experienced human resource departments, and smaller pools of potential employees. In addition, the Affordable Care Act has specific requirements that impact small businesses.
If you own a small business with 50 or fewer employees, you might think you can’t offer health insurance to benefit your workers. However, this isn’t always the case. Even though statistics show that most small businesses don’t provide health benefits, many affordable alternatives can help your company thrive while meeting the needs of your staff.
The Small Business Health Options Program (SHOP) is designed specifically for small businesses like yours. It makes it easier for you to find and purchase qualifying health plans for your employees at a price you can afford. If you want to learn more about this program and your options as an owner of a small business, read on!
Small business owners are faced with many challenges, but perhaps one of the most difficult is figuring out whether or not they need to offer health insurance. In some cases, it’s a no-brainer — you’re required by law to provide employee benefits, such as health insurance. But if you’re a small business owner who wants to offer help but doesn’t want to deal with the hassles of administering a plan, here are some questions you should ask yourself.
Do I have enough employees? If you have 50 or more full-time employees on the payroll, you’re required by law to offer health insurance as part of your employee benefits package. If you don’t meet this threshold, you aren’t required by law to provide health insurance — although many employers do so voluntarily because they believe it fosters loyalty in their workforce and helps attract talented employees who may be hesitant about taking a job at a company that doesn’t offer benefits.
Does my company have enough money? Offering health insurance is an expensive proposition for any business owner — even more so for small-business owners who have limited resources and may not have access to group discounts through larger companies or unions. You’ll need cash reserves to pay claims if your employees fall ill or hurt themselves.
Small groups are groups with fewer than 50 employees, according to the U.S. Internal Revenue Service (IRS). Small businesses can qualify for tax credits if they provide health care coverage. If you have 15 or fewer full-time equivalent employees (FTEs), you may be eligible for the Small Business Health Care Tax Credit (SHOP).
If you don’t want to offer group health insurance benefits to your employees but want them to have individual coverage, an HRA might work for you. An HRA is a hybrid between traditional group health insurance and a high-deductible plan with an HSA. You deposit funds into an account that employees can use to pay out-of-pocket expenses until the account reaches its maximum amount.
If your company has less than 50 full-time employees and does not offer health insurance coverage, you may qualify for a QSEHRA. This allows you to set up a tax-free account that employees can use for their medical expenses. The great thing about this option is that it doesn’t require any paperwork from the government or your employees. However, there are some restrictions on how much money can be contributed each year — it depends on how many employees you have — so make sure to check with an accountant before setting up a plan like this.
Self-funded health insurance is another option if you don’t offer health insurance through your employer. With this type of plan, you’re responsible for paying claims out of pocket until the deductible has been met, and then the insurance company will pick up the rest. This means that even though the premiums are lower in comparison with traditional plans, there’s a chance that you’ll end up paying more out of pocket than other types of plans because of their high deductibles.
This is a straightforward approach to providing health insurance for your employees. As an employer, you can pay a certain amount of money each month and use it to buy insurance on the individual market for each employee.
In this case, the amount you pay per employee should be equal to or greater than what the employee would pay for the same coverage in the group market. This approach is best for employers with fewer than 20 employees and who don’t contribute more than 50 percent of an employee’s premium costs.