Offering small business insurance can provide your organization with several benefits. For example, it can help you attract top talent, save money, and retain the best employees at your business. It can also provide tax incentives that reduce how much you have to pay for taxes annually.

But how does small business health insurance work? This guide will provide an overview of small business health insurance, including its requirements, benefits, and more, to ensure you can find the right option for your employees.

Small Business Insurance Explained

How does small business health insurance work? There are four things every small business owner should know about how small business health insurance works, including:

• Coverage is generally guaranteed
• You need at least one employee to qualify
• You must contribute toward employee premiums
• You can shop for coverage at any time of the year

Let’s look at each of these in more detail:

Coverage

First, if you’re eligible for a small business health insurance plan, your coverage is generally guaranteed to be issued by the insurance company.

This means that you, your employees, and dependents cannot be turned down for coverage based on pre-existing medical conditions.

All the eligible employees of your small business, and their eligible dependents, have the option to enroll in the new plan regardless of their medical condition.

Number of employees

Second, you may need to have at least one payroll employee in order to qualify for small business health insurance coverage.

That said, rules can vary from one state and one insurer to another. A licensed agent can help you understand if you qualify for coverage in your area.

Employee premiums

Third, you typically need to pay at least 50% of your employees’ monthly health insurance premiums. The minimum percentage can vary by state or insurance company. You may also opt to contribute toward premiums for dependents.

Enrollment period

As a small business owner, you can shop for health insurance coverage at any time of year. You don’t need to wait for a special open enrollment period.

Once you buy a plan, your premiums are generally locked in for a year. During the year, you can add new employees and dependents to the plan or drop coverage for people who no longer work for you.

You can typically renew your coverage at the end of the year or shop for a new plan.

Are Small Businesses Required to Provide Health Insurance?

As you begin to take a closer look at the start-up business insurance costs, you may be wondering whether small businesses are required to provide health insurance. In general, small business owners are not required to provide health insurance. However, employer health insurance requirements usually vary from state to state.

If your business has more than 50 employees, there’s a chance that your state may require you to provide the minimum level of health insurance coverage. However, small business owners are typically not required to provide health insurance for their employees. 

Even though you may not need to obtain healthcare for small businesses, it can be beneficial to do so. This is because offering health insurance can make it easier for you to attract the best workers in your field. 

Reasons to Offer Health Insurance at Your Small Business

There are several reasons to provide your employees health insurance. They include: 

Financial savings

You may be able to save a significant amount of money if you offer your employees health insurance. One of the most significant advantages of group insurance is that you can secure lower premiums. If you want to save on health insurance, consider providing coverage to your employees, especially if you have enough to lock in a lower rate. 

Healthier employees

You need your employees to maintain their health by visiting the doctor, dentist, and optometrist. If you offer health insurance to your employees, they may care for their health more. By providing them with health insurance that covers their healthcare expenses, they may be more likely to seek medical care when they need it. As a result, they might miss less time from work and be more efficient. 

Tax incentives

There are also significant tax incentives that you can enjoy if you offer health insurance to your employees. Business expenses are often tax-deductible, and the money you spend on your employees’ health insurance premiums might be subtracted from your taxable income, allowing you to save money.

Increased employee retention

If you offer health insurance to your employees, you can convince them to remain loyal to your business. Employees want to work for an organization that provides them with everything they need, including health insurance benefits. The more employees stay with your company, the less you have to spend on recruitment efforts and training. Plus, you can attract and retain top talent with a comprehensive healthcare plan.

Health Insurance Options for Small Businesses

If you’re considering getting health insurance for your small business, you may be overwhelmed by the many options available. Let’s take a closer look at the different types of healthcare coverage:

PPO

A PPO, or Preferred Provider Organization, plan provides the policyholder with the greatest amount of flexibility. While PPO plans often have higher premiums and out-of-pocket expenses, they provide significant coverage without many limitations. Members of this type of health insurance plan can visit doctors and specialists in or outside of their network.  

HMO

HMO stands for Health Maintenance Organization. The primary care physician is responsible for coordinating the care of the policyholder. The advantage of an HMO plan is that it provides excellent coverage and has low premiums. However, members can only receive medical care from in-network providers. 

EPO

Another option is an Exclusive Provider Organization (EPO) plan. This is similar to an HMO in that members are required to stay in network, but there’s no requirement for a PCP to coordinate their care. You do not need a referral if you want to see a specialist, and premiums are often more than an HMO. The in-network list is usually smaller for an EPO plan compared to other plans.

HSA

An HSA is known as a health savings account. This is an account you can offer to your employees that allows them to contribute a portion of their pre-tax dollars toward medical coverage. This means that your employees do not have to pay taxes on the money they put in the HSA. Employees can use their HSA money to cover their health expenses, such as prescription drugs, co-pays, and deductibles.

POS

POS refers to Point of Service plans. This combines the coordination of an HMO with the flexibility of a PPO. People with this type of plan have a primary care physician who refers them to specialists when needed. Out-of-pocket expenses are typically low, and they can choose to go to self-directed specialists without a referral. The coverage is less if someone goes out-of-network, but there is still some flexibility.

Integrated HRA

This is similar to an HSA, but only the employer contributes to a health reimbursement account (HRA) account. An HRA also needs to work in conjunction with a health insurance plan that offers minimum essential coverage as indicated by the Affordable Care Act.

Find Coverage for Your Small Business With eHealth

There are many options available if you want to provide health insurance to your employees. With eHealth, you can easily find the right coverage for your workers and ensure they have access to the care they need to stay healthy. 

Contact us today to speak with a team member and discuss the small business health insurance plans available.