A Guide to Small Business Health Insurance

The kind of plan design that is required, costs involved, how to administer it and if they are required to have one in the first place are plenty of questions.

Then add to the mix that the regulation of these plans has changed drastically in recent years, from the signing of the ACA by then President Obama in 2010 to the repeal efforts of the current administration and not to mention how the ongoing elections will affect the health insurance plans landscape in the coming years.

This is quite the load for small businesses wishing to comply with legal obligations while minimizing expenses and ensuring employees are satisfied and in good health. So, aim of this guide is to focus on a particular aspect: what are the requirements of these health care plans for small business owners and look at the relevant laws regarding them.

Some businesses are required by law to provide health insurance, while some are exempt. We’ll concentrate on these exemptions later, but there are bare minimum guidelines governing the provision of health insurance coverage to your employees.

Health insurance policies are subject to benefits, coverage, and cost requirements under the ACA. Every eligible employee must be enrolled in an employer-provided health insurance within 90 days of being employed.

In regards to forced health insurance for small businesses, the ACA is sometimes referred to as ObamaCare. According to the ACA, small businesses with less than fifty full-time or equivalent part-time workers are exempt from providing health insurance.

The majority of small businesses do not qualify because more than fifty employees are required. But not all, if an employer has more than fifty employees they are expected to cover them under a law. Everything has its limit, in this case it is the political administration then you. Otherwise, these industries will lag behind because they will not be able to afford legal counsel or industry newsletters. Some HR software vendors also provide blogs to address this issue, and clients have the option of undergoing training, such as what the HR software Workday offered.

As a small business, you're not legally required to offer health insurance. But there are a handful of reasons as to why you might want to consider offering this benefit.

These people (potential employees) often prioritize the benefits packages of the jobs, in which case offering compensation in form of desirable health insurance is enough. Offering insurance aids in recruiting and retaining top talent. 67% of the companies offer these kinds of plans for the enlisted employees to provide means to reach out to them.

Moreover, prevention is always better than a cure. But in the case that you do need to find a cure, providing health insurance for employees is a great start. It ensures a stable morale and talent retention baseline by virtue of people knowing their employer cares about them.

In the case of health insurance plans, there is more than one method for doing that. The following are the most common ways for small businesses:

Group health insurance policies: These policies can be obtained through the federal government’s SHOP Marketplace. In the past, it was a preferred option by small businesses, but today, many businesses do not have this option due to high costs and the minimum flexibility that it offers.

Qualified small employer health reimbursement arrangement (QSEHRA): Which was created by Congress in December 2016. QSEHRA has been gaining traction among small business owners in recent times. From this arrangement, employers provide employees with a monthly allowance that is tax-exempt and then employees use that amount to buy their own healthcare. There are benefits of QSEHRA whereby employees are allowed to choose the plan that they want but from an administrative standpoint, it is a lot simpler to administer.

Association health plans: Small businesses can band together with other small businesses so that they can buy big group health insurance (employer insurance contracted to a company with 50 or more employees). It works exactly like a regular group health insurance policy.

According to statistics, small-sized owners would prefer group health insurance as compared to an individual plan as it is cost-effective.

In most cases, group health insurance is obtained when you have a maximum of 50 employees. To apply for coverage in any state, you aren’t allowed to use the space provided for the application unless you own a desk or share a desk; and you need to submit to the company at least 70% of its uninsured employees for enrollment.

Additionally, only businesses that do not solely employ family members can be approved for group health insurance. If your business only employs relatives, you won’t be able to receive group health insurance; rather you’ll need to seek a family policy plan. Also, sole proprietors cannot seek group health insurance.

However, providing group health insurance to construction employees and part-time or seasonal employees is not restricted for businesses. Group plans can be complemented with individual health insurance plans for specific employees as well.

If you apply for group health insurance and meet the qualifications, at least 50 percent of the monthly premiums will have to be paid out by you. Also, you will have to enable workers to enroll their dependent children up to age 26 regardless of residence.

Nevertheless, there are no minimum contribution limits if employees acquire health insurance from a QSEHRA. The maximum each staff may be awarded each month is at your discretion.

The Affordable Care Act (ACA) includes provisions regarding employer reporting requirements and W-2 reporting of group health coverage. The employer will state the appropriate value of their group insurance coverage in their W-2 forms that they issue to employees. The report should include the total contributions made by both the employer and the employee. You do not have to report dental, vision, liability insurance, and wellness programs on these forms.

While you are required to inform the IRS and MRS of the health care costs during the year, it does not mean that the contribution is taxable as many companies can benefit from tax relief from such amounts.

Employers may find offering health insurance to employees to be a time-consuming, difficult, and expensive task, however, for some businesses, doing this might help them attract and keep new employees, as well as improve employee satisfaction and boost productivity. Take a moment and contemplate your options and create a strategy you think is ideal for your business.

Make queries with your legal counsel, assess whether health insurance is a core requirement with your employees, and then, you could speak with your HR software vendor. They likely have the necessary experience in this area. After that, just focus on what you need to for your business to function without any disturbances. You have to be patient with this as it’s a significant decision.