Health Insurance Benefits
Employer-Provided Health Insurance
Employer-provided health insurance is a tempting benefit for job seekers, but when business owners think about health insurance, they often feel intimidated. Still, between employees’ need for it and the legal requirements for employers, it’s some of the most worthwhile money you’ll ever spend on benefits.
Do You Need to Provide Insurance?
Under the Affordable Care Act, employers with over 50 full-time employees must offer affordable health insurance.
If your business has fewer than 25 employees, you can earn tax credits for providing health insurance. Requirements include:
- The insurance is purchased on the Small Business Health Options Program (SHOP) Exchange
- Yearly salaries for full-time employees average less than $50,000 a year
- Health insurance is available for all full-time employees
- You pay at least half the premium cost yourself
If your business meets the above requirements, you can be paid back in tax benefits for up to half of what you spend on premiums.
Your Options
Small group insurance
When we think of health insurance provided by a business, we are usually considering small group health insurance. Instead of buying insurance for employees individually, the employees are taken as a group, which an insurance company covers together. This allows all the employees to be included in the same risk pool, bringing overall costs down.
- PPOs, or preferred provider organizations
- HMOs, or health maintenance organizations
- High-deductible health plans (HDHPs) combined with health savings accounts (HSAs)
- Indemnity plans, or fee-for-service plans, which reimburse participants after they have paid for services out of pocket
Self-funded plans
Some employers, concerned about the cost of group insurance, choose self-funded insurance. Instead of an insurance company taking a risk on the potential cost of your employees’ healthcare, you take that risk yourself. The business puts a certain amount of money in trust for future healthcare expenses, then the employer pays for costs the employees incur.
Health reimbursement arrangements
One last option, which leaves employees more freedom, is to reimburse individuals for buying their own insurance. This way, they can select any plan that meets their needs, and you pay a fixed amount. They can buy insurance that fits within that budget, or use your payment to cover part of a more expensive plan while they cover the rest.
Where to Find Health Insurance
Once you have an idea of the kind of health insurance you’d like to provide, it’s time to start looking. You can find insurance through any of these sources:
- Directly from an insurance company, such as Aetna or Blue Cross. You may get a better rate this way, but it will take substantial time and effort to sort through your options.
- From a broker, who can show you different plans available and help you choose the best one for your company. They are paid on commission—don’t hire a broker who expects to be paid up front.
- Through a purchasing alliance, which will sell a variety of options to your employees at a single cost to you. This allows your coverage to come through a larger group, with bigger purchasing power, than your business has on its own. Plus, your employees can choose from a selection of plans.
- Through a professional employer organization (PEO). A PEO can handle a lot more than health insurance, such as human resources and payroll, but if you have one, it can manage your health insurance benefits as well.
- Through the SHOP exchange, provided by the government. Plans you find here are eligible for SHOP tax credits.
Ready to Start?
You don’t need to jump in at the deep end. Instead, you can start by consulting with a financial advisor. You can discuss the possibilities for a business your size, the options available in your area, and your goals. Our advisors are experienced in business management and matched to your needs.