Jane Dotson
Health insurance is a significant consideration for both employers and employees. While it is not a federal requirement for small businesses with fewer than 50 full-time employees to provide health insurance, larger companies with over 50 employees must offer affordable health insurance that meets minimum essential coverage. This is a crucial factor in attracting and retaining talent, as nearly one in five workers value comprehensive healthcare benefits over higher wages. As a result, companies are juggling rising healthcare costs and government regulations to remain competitive in the job market. This has led to a variety of health insurance options, including group health plans, integrated HRAs, and stipends, with some companies offering full coverage and additional benefits.
| Characteristics | Values |
|---|---|
| Percentage of private-sector employees in the US with employer-sponsored health insurance | 86% |
| States with the highest percentage of private-sector employees with employer-sponsored health insurance | Hawaii (97.5%) |
| States with the lowest percentage of private-sector employees with employer-sponsored health insurance | Wyoming (70.5%) |
| Number of states with a 3-year average above the national average | 7 |
| Companies that must provide health insurance | Those with 50 or more full-time employees (Applicable Large Employers) |
| Companies that don't have to provide health insurance | Those with fewer than 50 full-time employees |
| Companies that often can't or don't offer retirement plans | Small and medium-sized businesses |
| Companies that offer health insurance for part-time workers | Blue Cross Blue Shield, Kaiser Permanente, Oscar |
| Companies with the best health insurance benefits | Human Interest, Findigs, Ultimate Software, Regal.io, Accelerated Digital Media, Munchkin |
| Types of health insurance | Group health plans, Qualified Small Employer HRA (QSEHRA), Health Reimbursement Arrangements (HRAs), Individual Coverage HRA (ICHRA) |
| Benefits of offering health insurance | Improved recruitment, retention, employee satisfaction, and overall well-being |
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What You'll Learn
Companies with the best health insurance benefits
Health insurance is an important aspect of employee benefits. According to a study from the Society for Human Resources Management (SHRM), 62% of employees rated healthcare/medical benefits as "very important to their job satisfaction". In this competitive job market, companies are juggling candidate demands with rising healthcare costs and government regulations.
Some companies that offer good health insurance benefits include:
- Human Interest: This company offers 401(k) programs for small and medium-sized businesses, along with full-coverage benefits that include medical, vision, and dental paid 100% by the company (50% for dependents). They also provide supplemental fertility coverage and optional HSA contributions.
- Findigs: Findigs provides full medical, dental, and vision insurance coverage for employees and 90% coverage for their dependents.
- Ultimate Software: This people-management software developer offers a full benefits package with no-cost healthcare premiums for employees and their spouses, domestic partners, and eligible dependents. In addition, they provide dental and vision coverage, unlimited paid time off, fertility treatments, gender reassignment surgery, and paid leave for new mothers and fathers. They also provide financial assistance for parents looking to adopt.
- Regal.io: This software company covers 80% of the plan costs for team members' medical, dental, and vision coverage.
- Golden Hippo: This DTC company covers 100% of employee premiums for medical, dental, and vision, along with other benefits like a 401(k) matching program and stock-based retirement plans.
- Kimley-Horn: Kimley-Horn offers 100% coverage for full-time employees, and spouse and dependent coverage is offered at a reduced rate. Benefits are also available to part-time employees working at least 30 hours per week.
These companies demonstrate their commitment to their employees' well-being by offering comprehensive health insurance benefits, which is an important factor in attracting and retaining talent.
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Federal requirements for companies to offer medical insurance
In the United States, health insurance is provided through privately purchased insurance, social insurance, or a social welfare program funded by the government. While health insurance is one of the most sought-after benefits by employees, there is no federal law that mandates employers to provide their employees with health insurance. However, certain federal requirements and guidelines are to be followed by companies that offer medical insurance to their employees.
Firstly, under the Affordable Care Act (ACA), employers with 50 or more full-time employees (or the equivalent in part-time employees) must offer health insurance to 95% of their full-time employees and their dependents. This mandate also applies to companies that have a common owner, and while any penalties would be the responsibility of each individual company, failure to comply can result in hefty fines.
Secondly, the ACA requires that the health insurance offered meets minimum requirements for coverage and affordability. Specifically, the insurance plan must pay a minimum value, which means it must cover at least 60% of the cost of covered services. Additionally, the plan must be considered affordable, with the employee contribution being less than or equal to 9.83% in 2021.
Thirdly, the ACA prohibits insurers from discriminating against or charging higher rates for individuals based on pre-existing medical conditions. Instead, they must offer a standard set of coverage.
Lastly, while it is not a requirement, it is worth noting that employers may not impose enrollment waiting periods that exceed 90 days for plans beginning on or after January 1, 2014. Coverage must begin no later than the 91st day after the hire date.
In conclusion, while there is no federal mandate for companies to offer medical insurance, those that do must comply with the guidelines set forth by the Affordable Care Act to ensure adequate coverage and affordability for their employees.
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Group health insurance plans
There are various group health insurance plans available, and employers can choose a group medical plan for their organization and offer coverage to their employees and eligible dependents at a reduced rate. Employers can buy a group health policy directly from an insurance carrier, licensed agent, or broker. Insurance carriers offer various plan types, and most insurers require employers to meet a 70% minimum participation rate to receive coverage.
Some examples of group health plans include:
- Health Reimbursement Arrangements (HRAs): These are employer-funded group health plans that allow employees to be reimbursed tax-free for qualified medical expenses up to a fixed dollar amount per year.
- Qualified Small Employer HRA (QSEHRA): This is a health benefit for employers with fewer than 50 full-time employees who don't offer a group plan. Employers set an allowance for their budget, and employees choose the insurance policy and out-of-pocket medical expenses that work for them and their families.
- Taxable health stipend: This is a flat amount of money given to employees to spend on medical expenses, such as health insurance policies and out-of-pocket medical expenses. Stipends can be offered alongside any type of health benefit and may be more affordable and easier to administer for small business owners.
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Health insurance for part-time workers
Health insurance is a highly sought-after benefit for employees, with nearly one in five workers accepting a lower wage in exchange for more comprehensive healthcare in their benefits package. While some companies offer health insurance to their employees, it is not federally mandated for employers to provide health insurance to part-time employees. However, some part-time roles do come with health insurance benefits, and some companies, such as Lowe's, Chipotle, REI, Staples, and JPMorgan Chase, have started to offer health insurance to their part-time employees.
If your employer does not offer health insurance, you can purchase it through the Health Insurance Marketplace. You may qualify for savings on your monthly premiums and out-of-pocket costs based on your household size and income. You can also use Covered California to find affordable health insurance and financial help to pay for it. Additionally, you can deduct medical expenses that exceed 7.5% of your adjusted gross income, including health insurance premiums and out-of-pocket costs for medical, vision, or dental services.
If you are a small business owner, you have the option of offering health insurance to your employees. This can be done by purchasing a group health policy directly from an insurance carrier, licensed agent, or broker. You can also offer a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA), which allows you to set an allowance for your employees to pick an insurance policy and out-of-pocket medical expenses. QSEHRA reimbursements are income-tax-free for employees, and you must offer them to all your full-time employees, with the option of providing them to part-time employees as well.
Some companies that offer health insurance to their part-time employees include the family-owned supermarket chain that provides full coverage with no premiums and dental and vision coverage for employees working at least 22 hours a week. Accelerated Digital Media, a performance marketing agency, offers 90 to 100% coverage for health, dental, and vision insurance.
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Health insurance for small businesses
Health insurance is a critical factor for small businesses to help retain and recruit employees and sustain productivity and satisfaction. Small businesses have several options when it comes to health insurance for their employees.
Group health insurance plans
Group health insurance plans are a popular option for small businesses. With traditional group health insurance, employers choose a group medical plan for their organisation and offer coverage to their employees and eligible dependents at a reduced rate. Most insurers require employers to meet a minimum participation rate of 70% to receive coverage. Employers can buy a group health policy directly from an insurance carrier, licensed agent, or broker.
Qualified Small Employer HRA (QSEHRA)
A QSEHRA is a health benefit specifically for employers with fewer than 50 full-time employees who don't offer a group plan. With a QSEHRA, employers set an allowance up to the annual maximum contribution limit, and employees choose the insurance policy and out-of-pocket medical expenses that work best for them and their families. QSEHRA reimbursements are income-tax-free for employees, and they can use the allowance for health insurance premiums and other out-of-pocket costs like mental health services, virtual care, and prescription drugs.
Health Reimbursement Arrangements (HRAs)
HRAs are another option for small businesses to contribute to their employees' healthcare costs. This can include a traditional group health plan or an integrated HRA, which allows employers to support their employees' individual healthcare needs while still offering the group health plan of their choice.
Stipends
Stipends are a flat amount of money given to employees to spend on medical expenses, such as a health insurance policy and other out-of-pocket medical expenses. They are less regulated than other traditional health benefits and have no contribution limits, making them a more affordable and easier-to-administer option for small businesses. Stipends can be offered alongside any type of health benefit.
Small Business Health Insurance Plans
Small businesses can also explore small business health insurance plans offered by providers like Blue Cross and Blue Shield of Illinois and UnitedHealthcare. These plans are designed to help small businesses save money and support their employees' health and well-being.
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Frequently asked questions
No, but it is highly beneficial for recruitment and retention. Under the Affordable Care Act (ACA), employers with 50 or more full-time employees must offer affordable health insurance. Companies with fewer than 50 full-time employees are not required to provide health insurance but can do so using a qualified small employer HRA (QSEHRA).
Alternatives include stand-alone HRAs like the individual coverage HRA (ICHRA) and QSEHRA. These allow employers to reimburse employees tax-free for qualifying medical expenses, including individual health insurance premiums. Another alternative is a taxable health stipend, which is a flat amount of money given to employees to spend on medical expenses.
According to Built In, some companies that offer good health insurance benefits include Human Interest, Findigs, Ultimate Software, Regal.io, and Accelerated Digital Media.
