A Small Business Owner’s Guide to Health Insurance
As of 2020, around 28 million Americans did not have health insurance coverage. If you’re a small business owner, you likely feel the weight on your shoulders of trying to understand what you owe your employees and how to determine which company coverage is right for your business.
It’s a lot to decipher, but you’re in the right place for help!
Read on to learn more about your health insurance requirements as a small business, how insurance can impact employee relationships, and your health insurance coverage options.
Health Insurance Requirements for Small Businesses
In 2021, the Affordable Care Act (ACA) requires all businesses that employ 50 or more full-time workers to offer an affordable company plan. This group health insurance offering must include all essential benefits. If you fail to comply with this requirement, you could have to pay a penalty.
If you have fewer than 50 employees, however, you can decide whether or not you want to provide a group health insurance plan.
Benefits of Providing Health Insurance to Your Employees
If you don’t fall under the ACA requirements, you might not think it’s worth it to offer health insurance to your employees since you don’t have to. However, consider the following benefits of doing so.
It Can Help You Attract and Keep Employees
Workers pay close attention to the types of benefits companies offer their employees. If you offer a health insurance plan, that could be the deciding factor when a candidate is choosing between your company and a competitor. Likewise, if you offer a comprehensive healthcare plan, then it might help prevent your current employees from job searching.
It Can Keep Your Employees Healthier
When your employees have health insurance, they’ll be more likely to go to the doctor to get the help they need to stay healthy. This translates to your employees taking fewer sick days throughout the year. It may also help keep them productive since they’ll feel better overall.
Coverage Options
So, you’ve decided that you want to offer health insurance to your employees. What kinds of business insurance plans are available to you?
Self-Funded Health Plans
With a self-funded health plan, your company sponsors the plan instead of an insurance company. That means you take on risk since you have to pay the employees’ claims and manage all aspects of administering the plans. It leads to more work for your company, but it’s a more cost-effective solution as you won’t have to pay fees to an insurance company.
You may also get some tax advantages for providing a self-funded health plan.
Fully-Funded Health Plans
Your other option is a fully-funded health plan, where the insurance carrier does the work for you. All you have to do is pay a monthly premium and the insurance company pays for employee claims and handles all the management of the plan. This takes the work off your plate, but, of course, comes with a higher price.
Additionally, it’s common for fully-funded plans to increase in price each year.
Consider Offering Health Insurance to Your Employees
Now that you’ve learned more about the requirements, benefits, and different health insurance coverage options available, you can make a more informed decision about what makes the most sense for your company.
If you’d like to read more articles like this, take a few minutes to check out our other articles before you go.
