Next year will be the first year that small businesses face penalties under the Affordable Care Act if they don’t provide health insurance coverage for employees. Those with 100 or more full-time employees will have to provide insurance to at least 70% of them; in 2016 that threshold drops to 50 or more full-time employees and coverage extends to 95%. Although this “employer mandate” is the law, small business health insurance is also a way to attract top talent and keep them from jumping ship. Businesses spend about one-fifth an employee’s annual salary to replace them.
Yet for the 96% of small businesses that fall into the less-than-50 employee category, health insurance remains optional and many of those business owners mistakenly believe they can’t afford to offer it. Foregoing health benefits for employees may help your bottom line in the short run but it will likely hurt your success in the long-term. As the economy gets stronger and the talent pool gets thinner, small businesses that don’t provide health insurance may find good candidates heading for their insurance-providing competitors.
There are, however, affordable options for small business health insurance. Individual insurance, for example, is generally more affordable than group health insurance. Thanks to the Affordable Care Act (ACA), it’s a more viable option than ever before, because individual plans are now required to cover all individuals, regardless of pre-existing health issues. Individual plans might also be an attractive option because of government subsidies available to lower the cost of premiums for employees that meet certain income requirements.
Some small businesses may opt to provide an allowance for employees to use toward the purchase of health insurance. That gives employees the freedom to choose any plan they want and work with a health insurance agent to make shopping for a plan easier. It also allows small business owners to know, with certainty, their health insurance costs.
With group insurance, employers pay a portion of the premium and the remainder is deducted from employees’ paychecks. Employees also share the costs of health insurance through their annual out-of-pocket deductible, copayments at the time of service and co-insurance, which is the portion of the cost of services billed after the service is received. Generally the greater the cost sharing, the lower the cost of the premium for employers; the more comprehensive the plan, the higher the premiums. Plans can also vary greatly in terms of providers, hospitals and medical groups. What you choose as a business owner often depends on what your employees want and your business can afford.
Small businesses with 50 or fewer employees also have the option to use the Small Business Health Options Program (SHOP) Marketplace to offer coverage to their employees.
Understanding the choices for small business health insurance is a lot easier with the help of the professionals with HealthMarkets Insurance Agency. With access to more than 200 different insurance companies and thousands of health plans nationwide, HealthMarkets can provide a personalized consultation with each employee and help business owners find health insurance options that meets their needs. Call us 24/7 at (800) 976-5818 or meet with one of our 3,000 local, licensed health insurance agents.