The Affordable Care Act (ACA) defines a small business as a group of no more than 50 full-time employees (FTEs), although some states define it differently. California, for example, classifies small businesses as employers with no more than 100 FTEs. Small business owners are not legally required to provide health insurance to their employees, but there are rules for those who do.
A small business owner enrolls in a group health insurance plan offered by a private insurance company and then offers his employees the option of enrolling in that plan. The employer pays a portion of its employees’ monthly premiums, and employees are generally responsible for their deductibles, copayments, and services not covered by the plan.
Health insurance options for small businesses
Through the ACA, small business owners can purchase health insurance for their employees from approved insurance companies with the Small Business Health Options Program (SHOP). Obtaining insurance through the SHOP marketplace allows employers to offer health plans from multiple insurance companies and qualifies them for the Small Business Healthcare Tax Credit, which can help defray the cost of coverage. .
Small business owners can also work with an insurance broker who does all the research and plan comparisons to find the best plan for your business at no additional cost.
Group plans for small businesses are organized in “metal” tiers: bronze, silver, gold and platinum. Each level includes different premiums, deductibles, copayments and reimbursement limits, catering to people who prefer to pay higher monthly premiums for more coverage and those who prefer to pay a lower monthly premium and risk higher hedging costs in the event of an event. that they need treatment. Employers have flexibility in the type of plans they choose to offer their employees.
Health insurance requirements for small businesses
Small business owners are not required to provide health insurance benefits to employees. If they choose to do so, they must meet certain requirements set by the ACA below. These requirements may vary by state.
- Inclusivity: Health insurance should be offered to all employees, not just managers or any other subgroup.
- Coverage of essential health benefits: Under the ACA, a health plan offered by a small business owner must include coverage for basic services, such as emergency services, pregnancy care and services, maternity care and newborn, ambulatory care, prescription drugs and more.
- Minimum contribution: The ACA requires small businesses to contribute at least 50% of the monthly premium cost of the plans they offer to be eligible for the small business healthcare tax credit, Jugan says, and states have their own variations of this rule. New Jersey, for example, requires small business owners to pay at least 10% of the total cost of the plan. “The less an employer pays, the more the employee has to pay,” notes Jugan, which can be a disadvantage for some workers, who may decide to seek another job with a cheaper health plan.
In addition to these rules, states generally require a minimum percentage of employee participation in health insurance plans offered by small businesses, says Jugan. “The reason behind it [rule] is that if there are 10 employees at a company and only three sign up, chances are those three are really sick. To better distribute costs, the total number of enrollments should be made up of a mix of individuals with varying health conditions.