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. But what if your company has fewer than 50 employees? Are there health insurance options for you?
S Corporations may traditionally be smaller companies, with fewer than 100 shareholders, but luckily there are a variety of health insurance coverage options for S Corps to consider—whether you have one employee or 49.
Can (and Should) You Offer Health Insurance for Your S Corp?
If you have an S Corp with one or more employees, you can provide health insurance coverage as long as it is not for your spouse or business partner. One option is to shop around and see what insurance companies are offering and which plan would work best for you and your employees. Another option is to work with a broker or agent.
Although health insurance can be costly, not having coverage for your employees can also affect your business, especially when considering employee retention and ensuring that your business is well staffed and running smoothly. For many small businesses owners, the health and happiness of their employees is also an important factor to consider.
According to the U.S. Census Bureau, 27.5 million Americans do not have health insurance. Offering health insurance to your workers is a way to show your commitment to their well-being. It also helps recognize their value to your business, provides a sense of stability and helps contribute to the “happiness” factor.
How to Get Health Insurance as an S Corp or Small Business
Small business owners have a number of options when they consider providing health insurance to their employees. The reality, however, is that this research is time-consuming, especially when you are already busy operating your small business. Luckily, we’ve done some of the work for you.
Group Insurance for One
If you are self-employed as an S Corp 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, depend 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.
For smaller companies and nonprofits that have 1-25 employees, there is a program available called the Small Business Health Options Program (SHOP). If you qualify, 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 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.)
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. It 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.
A few examples of business associations that offer health insurance through membership include the following professional and trade organizations:
- AARP Health
- Alliance for Affordable Services
- Affiliated Workers Association (AWA)
- American Institute of Graphic Arts (AIGA)
- Association for Computing Machinery (ACM)
- Costco Health Insurance Marketplace
- Freelancers Union
- National Association of Female Executives (NAFE)
- National Association for the Self-Employed (NASE)
- Small Business Service Bureau
- Writers Guild of America (WGA)
Navigating the complexities of small business health insurance can be daunting. This is why so many small 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. Finding the right broker that best meets your needs will help you navigate the complicated world of health insurance. Some national options include Aetna, Humana and UnitedHealthcare.
Health Reimbursement Arrangement (HRA)
HRAs are health reimbursement arrangements that allow an employer to contribute and reimburse employees for medical expenses. Although this is not the same as offering medical insurance, the money is tax-free and the monthly contribution allows employees to pay for health care premiums or other approved medical expenses.
One offering available to small business owners is the Qualified Small Employer Health Reimbursement Arrangement (QSEHRA).
Partner with Incfile for Your S Corp Needs
Working through all the health plan options can be a dizzying — if not intimidating and time-consuming — prospect. Thankfully, if you’re ready to hire your first employee, or if you want to re-evaluate your options for health insurance, the information offered in this article will help you get started. Small business health insurance is not always easy, but it can be done with research and a willingness to try some different options.
Are you ready to start a business, form an S Corp or reorganize your current business structure with incorporation services? Contact Incfile today! Incfile has the expertise to help you evaluate your options with state-specific advice. Visit Incfile’s learning and help center for more information.