A Guide to Small Business Health Insurance [Requirements]

One of the biggest issues for any HR department and small business is health insurance. There are a lot of unknowns when it comes to what kind of plan to provide, how much it will cost, how to administer it, and whether you are even obligated to provide one.

It doesn’t help that the laws and regulations have changed dramatically in recent years, from President Barack Obama’s introduction of the Affordable Care Legislation (ACA) in 2010, to current administration attempts to dismantle the act, to the impact of the forthcoming election on health insurance coverage.

This is a lot to take in for small firms attempting to stay on the right side of the law while managing costs and keeping staff happy and healthy. That’s why we’ve put together this guide, which covers small-business healthcare needs as well as important health-insurance rules.

1. What do small business owners need to know about health insurance requirements?

Some firms must provide health insurance by law, while others are exempt. We’ll go over these exemptions in more detail below, but there are certain basic prerequisites for offering health insurance to your employees.

To begin, every health insurance plan you offer must meet the ACA’s benefit, coverage, and cost requirements. You must also provide health insurance to all qualified employees within the first 90 days of their employment.

2. Do small businesses have to provide health insurance under the ACA?

Under the Affordable Care Act (ACA), also known as Obamacare, small firms with less than 50 full-time employees (or the equivalent in part-time workers) are exempt from providing health insurance.
Most small enterprises are excluded because they have fewer than 50 employees. Health insurance is required by law if your company has more than 50 full-time employees.

The catch here is that laws change over time, especially as political regimes change, so it’s critical to have safeguards in place to ensure that you’re up to date on the newest rules. This could include reading your HR software vendor’s blogs, subscribing to industry periodicals and newsletters, consulting with legal experts, and even subscribing to industry publications and newsletters. Workday, the HR software, even offers training on how to cope with the ACA.

3. What benefits are there to providing health insurance?

While providing health insurance is not required by law for small businesses, there are several reasons why you should consider it.
People value benefits packages when looking for jobs, thus providing health insurance will help you attract talent. You may not be able to offer the same remuneration as giant corporations as a small firm, but you can compensate by providing attractive benefits such as health insurance. In fact, health insurance is provided by two-thirds of firms as a means of attracting and retaining employees.

Furthermore, a healthy workforce is a happy workforce, and prevention is preferable to cure. Providing health insurance to employees demonstrates that you care about their well-being, which boosts morale, improves satisfaction, and aids in talent retention.

4. How can I purchase a health insurance plan?

A health insurance policy can be purchased in a variety of ways. The following are the most common for small businesses:
Group health insurance coverage are available through the SHOP Marketplace, which is managed by the federal government. This used to be the most popular option for small enterprises, but due to high costs and limited flexibility, it is no longer an option for many.

QSEHRA (Qualified Small Employer Health Reimbursement Arrangement): A QSEHRA is a type of qualified small employer health reimbursement arrangement QSEHRA was established by Congress in December 2016 and is quickly becoming a popular option for small enterprises. Businesses provide employees with a tax-free monthly allowance, and employees choose and pay for their own health care using that money. The benefits of QESHRA include the ability for employees to choose their own plan and the fact that it is much easier to handle from an administrative standpoint.

Small businesses can join together with other small businesses to purchase large-group health insurance (which is reserved for companies with more than 50 employees). This functions similarly to a traditional group health insurance coverage.

5. How many employees do you need to qualify for group health insurance?

Small businesses can offer health insurance to their employees at a lower cost by purchasing group policies rather than individual coverage.
To be eligible for group health insurance, a company must have fewer than 50 employees. You must also have an office in the state where you’re applying for coverage (even if it’s just a desk in a coworking space), and you must enroll at least 70% of your uninsured employees.

If you manage a family business, you’ll need to evaluate your eligibility for group health insurance because you’ll require employees who aren’t related to or married to the owner. If you only have family members working for you, you’ll have to apply for a family health insurance plan. In addition, sole proprietors are not eligible for group health insurance.
Although part-time and seasonal employees are not considered members of the group, you can nevertheless choose to provide them with group health insurance. In addition to your group plan, you can offer individual health insurance to certain employees.

6. What is the minimum employer contribution for health insurance?

You must pay at least half of the monthly health insurance premiums if you meet the requirements and choose a group health insurance plan. Employees must also be able to cover their dependent children until they reach the age of 26, even if they do not reside at home.
There are no minimum contribution requirements if you acquire health insurance through the QSEHRA, and you can select how much to give each employee every month.

7. Do small-business employers have to report health insurance on Form W-2?

Employers must declare the cost of coverage under an employer-sponsored group health plan on an employee’s Form W-2 under the Affordable Care Act. Both the amount paid by the employer and the amount paid by the employee should be included in the cost reported. These forms do not require you to disclose dental, vision, liability insurance, or wellness programs.
Even though you must disclose health insurance costs on this form, this contribution is not taxed. Many businesses are entitled for tax benefits as a result of these payments.

Stay ahead of the game

Employee health insurance can be expensive, time-consuming, and confusing, but it can also be helpful in terms of attracting and retaining talent, improving employee morale and satisfaction, and increasing productivity. You must analyze your options and choose the best path forward for your company.
Consult with legal experts, ask your employees if health insurance is a priority, and get assistance from your HR software vendor, who should have extensive experience with benefits management. Then do what you need to do to keep your business running properly. Don’t rush this decision; it’s crucial.