Alyssa Lane
As a new business owner, you may be considering providing health insurance for your employees. Small business health insurance, also known as group health insurance, provides business owners with access to coverage for their employees. In the US, small business owners can refer to HealthCare.gov to learn more about health insurance products and services for their employees. Small employers (generally those with 1-50 employees) may be able to enroll in Small Business Health Options Program (SHOP) plans through an insurance company or with the assistance of a SHOP-registered agent or broker. There are no limited enrollment periods for small business health insurance, and employers can shop for a new plan any time of the year.
| Characteristics | Values |
|---|---|
| Number of employees | Small businesses are generally those with 1-50 employees. Small Business Health Options Program (SHOP) plans are available for businesses with 1-50 employees. UnitedHealthcare categorises small groups as up to 100 employees. |
| Self-employed | Businesses with no employees other than owners or their spouses are not eligible for SHOP plans. Self-employed people can find out more about their coverage options on HealthCare.gov. |
| Plan options | There are five types of healthcare plans for small businesses: HMO, PPO, POS, HDHP, and HSA. |
| Cost | The cost of small business health insurance depends on the type of plan. Consider premiums, out-of-pocket costs, and provider networks when comparing plans. |
| Tax credits | Small businesses with fewer than 25 full-time employees, who pay average wages of $56,000 or less, or who cover at least half of their employees' premiums may be eligible for tax credits for their small group health insurance plans. |
| Eligibility | To qualify for SHOP, a business must have at least one employee other than the owners or their spouses. |
| Enrolment period | There is no limited enrolment period for small business health insurance. If you enrol by the 15th of each month, coverage can usually begin on the 1st of the following month. |
| Shared Responsibility Payment | Businesses with over 50 employees may have to make a Shared Responsibility Payment if they do not offer coverage that meets certain standards. |
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What You'll Learn
Small Business Health Options Program (SHOP)
The Small Business Health Options Program (SHOP) is a scheme designed to help businesses provide health coverage to their employees. SHOP insurance is available to small employers with 1-50 full-time equivalent employees (FTEs) in most states. In some states, employers with 1-100 employees can qualify.
SHOP coverage is available to small businesses with fewer than 50 employees. If your business has fewer than 25 employees, you may qualify for the Small Business Health Care Tax Credit, which can cover up to 50% of your premium costs (up to 35% for tax-exempt/non-profit employers). This tax credit is generally only available when an employer enrols in a SHOP plan. You can use the Small Business Health Care Tax Credit Estimator to find out if you qualify and how much you could save.
As an employer, you have two options for enrolling in SHOP insurance. You can either enrol through an insurance company or with the assistance of a SHOP-registered agent or broker. You control the coverage you offer and how much you pay toward employee premiums. You can choose from a range of high-quality private health insurance plans that meet the needs of your business and employees.
To learn more about SHOP and to see your options, you can visit the SHOP Marketplace at HealthCare.gov. You can also contact the SHOP Call Center at 1-800-706-7893 (TTY users can call 1-888-201-6445) from Monday to Friday, 9 am to 5 pm EST.
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Employer-sponsored insurance plans
Under the Affordable Care Act (also known as Obamacare), employers with at least 50 full-time employees or "full-time equivalents" are required to offer affordable, minimum-value insurance to their full-time (30+ hours per week) workers or face a potential tax penalty. Applicable large employers (ALEs) that fail to sponsor the required coverage may be subject to penalties. Companies that sponsor coverage for their employees must report the cost of that coverage on W-2 forms.
Small employers (generally those with 1-50 employees) may be able to enrol in Small Business Health Options Program (SHOP) plans through an insurance company or with the assistance of a SHOP-registered agent or broker. Small employers can also offer health benefits through group health insurance, health reimbursement arrangements (HRAs), and health stipends. Group health insurance is the most popular type of job-based health plan, but it can be costly for employers and may not suit the needs of all employees.
An alternative to group health insurance is a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA), which is available to employers with fewer than 50 full-time equivalent employees. This type of HRA has no minimum contribution limits, but there are annual maximum limits set by the IRS. An HRA allows small employers to control their health spending by setting their own budgets and reimbursing employees for out-of-pocket medical expenses, individual health insurance premiums, or both.
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Health Maintenance Organization (HMO) plans
As a new business owner, you can explore Health Maintenance Organization (HMO) plans, which are a popular type of insurance that provides comprehensive coverage for individuals and small businesses. HMO plans are designed to offer affordable health insurance options through a network of physicians and healthcare providers. This means that your employees will have access to a range of doctors and specialists within the HMO network.
One of the key benefits of HMO plans is their cost-effectiveness. HMO plans typically have lower premiums than other types of insurance plans, such as Preferred Provider Organization (PPO) plans. This can be advantageous for small businesses as it allows you to provide health benefits to your employees at a more manageable cost. Additionally, with HMO plans, your employees will have the convenience of receiving all their healthcare services within the same network, including primary care, specialist referrals, and hospital services.
When enrolling in an HMO plan, your employees will be assigned a designated primary care physician (PCP) within the network. This PCP will serve as their main point of contact for most of their healthcare needs. If they require specialized care, the PCP will provide referrals to in-network specialists. It's important to note that HMO plans typically limit coverage to in-network providers, and receiving care outside the network may result in higher out-of-pocket expenses for your employees.
To get started with HMO plans for your business, you can explore the Small Business Health Options Program (SHOP) Marketplace, which is a part of HealthCare.gov. This program assists small businesses with 50 or fewer employees in finding suitable health insurance options. By enrolling in an HMO plan through SHOP, you can compare coverage options, including different plans, premiums, and coverage options to find the best fit for your business and employees. Additionally, you can seek guidance from a SHOP-registered agent or broker who can help you navigate the process and find the most suitable HMO plan for your new business.
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Self-employed health coverage
If you're self-employed, you can use the individual Health Insurance Marketplace to enrol in flexible, high-quality health coverage that works for people who run their own businesses. You're considered self-employed if your business earns an income but doesn't have any employees. If you do have employees, you may be considered a small business and can use the Small Business Health Options Program (SHOP) Marketplace to offer coverage to yourself and your employees.
When you fill out a Marketplace application, you'll find out if you qualify for premium tax credits and other savings on a health plan. You can choose from several categories of coverage, from plans with low premiums that mainly protect you in worst-case scenarios to plans where you'll pay more each month but less for health care services.
Short-term health insurance plans are also available for self-employed people with no employees. These plans are designed to provide up to 4 months of coverage during a 12-month period while you consider longer-term options.
The Health Insurance Marketplace, established by the Affordable Care Act (ACA), offers a variety of individual and family plans. Cost-Sharing Reductions (CSRs) are a type of subsidy to help eligible individuals and families further reduce their out-of-pocket costs for care. CSRs are only available to eligible consumers who enrol in a Silver Plan. A Premium Tax Credit (PTC) can be applied to all individual and family ACA metal level plans and can help reduce the monthly premium, either during tax filing or in advance and paid directly to the health plan insurer.
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Health insurance brokers
As a new business owner, you have the option to offer health insurance coverage to your employees. This can be a major decision and a complex process, so it's important to understand the different options available to you. One way to navigate this landscape is by engaging the services of a health insurance broker.
Brokers can also assist with the practical aspects of enrolling in a plan, such as managing deadlines and paperwork, submitting applications, and communicating with insurance companies. They can provide ongoing support and act as a resource even after you have enrolled in a plan. This ensures that you not only get the right coverage but also that the process is simplified and stress-free.
It is important to note that brokers are typically paid a commission by the insurance company, which is included in the cost of the health insurance, and not by the client. This means that engaging a broker should not incur additional costs for you.
If you are interested in exploring health insurance options for your new business, you can start by visiting websites like healthcare.gov, which provide information on Small Business Health Options Programs (SHOP) and resources for small businesses with 1-50 employees. You can also contact the SHOP Call Center during business hours for more information.
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Frequently asked questions
SHOP stands for Small Business Health Options Program. Small employers (generally those with 1-50 employees) may be able to enroll in SHOP plans through an insurance company or with the assistance of a SHOP-registered agent or broker.
There are five types of healthcare plans for small businesses: HMO, PPO, POS, HDHP, and HSA. HMO (Health Maintenance Organization) is designed to keep costs low and predictable by only using doctors and hospitals within the HMO network. PPO (Preferred Provider Organization) networks let you choose where to go for care without a referral from a PCP. POS (Point of Service) requires a referral from your PCP before seeing a specialist and covers out-of-network doctors at a higher out-of-pocket cost. HDHP (High Deductible Health Plan) has low premiums but higher immediate out-of-pocket costs. HSA (Health Savings Account) is a tax-free fund used to offset costs such as deductibles.
Small business health insurance, also known as group health insurance, provides small business owners access to coverage for their employees. As a small business owner, you can explore available small business health insurance plan options and review the eligibility requirements to find the best coverage for your company. You can also find an agent or broker in your area to help you find the coverage you need.
The number of employees is just one of four requirements to qualify your business for small group health insurance. Other factors to consider include premiums, out-of-pocket costs, and provider networks.
