If you’re a small business owner or startup founder, one of the most complicated issues to manage is figuring out how to provide health insurance for your employees.
Group health insurance often seems more affordable for larger companies. According to Bureau of Labor Statistics (BLS) stats cited by Fundera, 88% of employers with more than 500 employees offer health insurance, while only 55% of employers with fewer than 100 employees offer these benefits.
Under the Affordable Care Act, businesses and nonprofit organizations with more than 50 employees are required to offer health insurance or they have to pay a tax penalty. Luckily, there are a variety of options for health insurance for small business owners.
Here are a few of the most common solutions to help get you and your employees insured.
For smaller companies and nonprofits that have 1-25 employees, there is a program available called the Small Business Health Options Program (SHOP) that enables these employers to purchase group health insurance for their employees.
This is a good program to use if you qualify, because your business can get tax credits to help offset the cost of your company’s contribution to your employees’ health insurance premiums.
In order to qualify for these health insurance tax credits, your business must meet the following requirements:
- You have fewer than 25 full-time equivalent (FTE) employees.
- Your business pays an average employee salary of $50,000 or less (per year).
- Your business pays at least half (50%) of the health insurance premium costs for full-time employees.
- Your business offers the SHOP health insurance coverage to all of your full-time employees. (This does not include offering insurance to your employees who work less than 30 hours per week or your employees’ dependents.)
Group Insurance for One
If you are self-employed as a sole proprietor or single-member LLC owner, you still have options to get group health insurance, even though you have no employees and are considered a “group of one.” This does, however, depends on which state you are in.
HealthMarkets offers a list of states that offer group health policies to self-employed groups of one. If you do not live in one of those states, you need to purchase an individual health insurance policy.
Even if your business does not qualify for SHOP coverage, start by checking out HealthCare.gov to learn more about options for health insurance for your small business.
This site can help you understand your options and get coverage, depending on the number of employees that you have and other factors. The site can also help you find an insurance agent or broker.
Do you belong to any industry associations, professional associations or business alliances? Check to see if there are options to buy group health insurance for your business as part of these larger organizations.
Sometimes there is “strength in numbers” and you might be able to get a better deal on health insurance through an association.
Navigating the complexities of small business health insurance can be daunting, especially for busy entrepreneurs who have a business to run. This is why so many business owners choose to work with insurance brokers or insurance agents.
Ask for referrals for a good insurance broker/agent in your area. Brokers know the market in your state and can help you find the right coverage options at the best possible prices.
Although brokers earn a commission when they sell an insurance plan to your business, they are supposed to work in your best interest and recommend the right plan for your needs. And when you consider how much time they can help you save, and how many costly errors they can potentially help you avoid, brokers often deliver good value to business owners.
Insurance broker/agents can also help you get coverage for other types of insurance like life, disability, dental and more.
If you’re ready to hire your first employee, or if you want to re-evaluate your options for health insurance, there is plenty of help and information available to you. Small business health insurance is not always easy, but it can be done with research and a willingness to try some different options.
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