Paul Sanchez
Health insurance is a critical factor for businesses to help retain and recruit employees and sustain productivity and satisfaction. There are several options for employers to choose from when it comes to health insurance for their employees, such as group insurance, Health Reimbursement Accounts (HRAs), supplemental plans, flex-spending accounts, and COBRA. Employers can also choose how much of an employee's premium they would like to pay. To find the best plan, employers should consider price, benefits, and features. They should also check the availability of different plans in their state. Employees may still be eligible for premium tax credits if the plan offered by their employer isn't considered affordable.
| Characteristics | Values |
|---|---|
| How to find medical insurance for employees | Use resources like HealthCare.gov and Covered California to learn about health insurance products and services for employees |
| Enroll in SHOP insurance to get affordable health and dental insurance for small businesses and their employees | |
| Contact insurance companies like UnitedHealthcare to get a quote for small business health insurance | |
| Consider price, benefits, and features when choosing a health plan for employees | |
| Think about whether to offer one plan or a choice of plans, and whether to include medical coverage, dental coverage, or both | |
| Use an Affordability Tool to determine if employer-sponsored coverage is affordable, based on the employee's household income | |
| Understand that employer-sponsored health insurance can affect taxes, as premium payments are deducted from the employee's paycheck before taxes, lowering their taxable income | |
| Explore different types of health coverage options, such as group insurance, Health Reimbursement Accounts (HRAs), supplemental plans, flex spending accounts, and COBRA | |
| Verify eligibility for SHOP insurance by completing the SHOP Eligibility Determination Form | |
| Work with a SHOP-registered agent, broker, or insurance company to navigate the specific enrollment steps and monthly deadlines | |
| For federal employees, retirees, and their survivors, consider the FEHB Program, which offers a wide range of health plans, including Consumer-Driven, High Deductible, and Fee-for-Service (FFS) plans |
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What You'll Learn
Understanding the different types of health coverage options
Group Health Insurance Plans
Group health insurance plans are the most popular type of job-based health plan. Companies with at least two full-time employees but no more than 50 can enrol in a small group medical plan. These plans typically cover essential health benefits outlined by the Affordable Care Act (ACA), ensuring that employees can access minimum standard medical care. Larger companies with 50 or more employees may opt for a large group health plan. While group plans are widespread and provide a simple solution for businesses, they may lack flexibility and can be costly for employers, especially with annual rate hikes.
Health Reimbursement Arrangements (HRAs)
HRAs are employer-funded health benefits that allow reimbursement for employees' qualifying medical expenses, including individual health insurance premiums and out-of-pocket costs, without additional taxes. With HRAs, employers can set a monthly allowance that fits their budget, and employees have the freedom to choose the medical services and individual plans that best suit their needs. There are different types of HRAs, such as the Individual Coverage HRA (ICHRA) and the Qualified Small Employer HRA (QSEHRA), each with its own unique features and eligibility requirements.
Health Maintenance Organizations (HMOs)
HMOs are currently the most prevalent type of health care offered by employers. They are popular due to their relatively lower costs compared to traditional fee-for-service plans and their broad health coverage. However, HMOs have been criticised for potentially compromising patient care to cut costs. With HMOs, the insurance company or managed care company directly contracts with physicians and hospitals to provide care to insured individuals, who are typically required to choose a general practitioner from a pre-approved list.
Preferred Provider Organisations (PPOs)
PPOs are another type of health insurance plan that may offer more flexibility than HMOs. PPOs typically have a wider network of healthcare providers, giving employees more choices for their care. PPOs often have higher out-of-pocket costs but may provide better coverage for out-of-network services compared to HMOs.
Supplemental Plans and Flex Spending Accounts
Supplemental plans and flex spending accounts are additional options that can be offered alongside a primary health plan. These accounts allow employees to set aside pre-tax dollars to pay for qualifying medical expenses, providing a way to manage healthcare costs not fully covered by their primary insurance.
When considering health coverage options, it is important to evaluate the specific needs of your employees, the affordability of different plans, and the level of flexibility desired. By understanding these various types of health coverage options, employers can make more informed decisions about providing valuable health benefits to their employees.
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How to determine if your employer-sponsored coverage is affordable
When it comes to determining the affordability of employer-sponsored health insurance coverage, several factors come into play. Firstly, it's important to understand that the affordability threshold percentage can change annually. For instance, in 2024, a health plan was deemed affordable if the premium did not exceed 8.39% of the employee's household income. This threshold increased to 9.02% for 2025. Therefore, it is essential to stay informed about the current year's threshold.
To assess whether your employer-sponsored coverage is affordable, you can utilise the Affordability Tool provided by Covered California. This tool allows you to estimate whether you and your family members qualify for financial assistance. It's worth noting that even if your employer-provided insurance is deemed affordable, your family members may still be eligible for financial aid if they meet certain criteria.
Another aspect to consider is the minimum value standard. A health plan meets this standard if it covers a substantial portion of the total cost of medical services, typically at least 60%. Additionally, it should provide adequate coverage for hospital and doctor services, comparable to a Bronze plan with Covered California. If your employer-sponsored plan meets this minimum value standard and is considered affordable, you won't be eligible for financial assistance to reduce the cost of a Covered California health plan.
It's worth noting that employer-sponsored coverage usually refers to health insurance offered to both the employee and their dependents through their job. Typically, the employer pays a significant part of the premium, while the employee contributes the remaining amount. This arrangement can vary among employers, so it's essential to review the specific details of your employer's plan. Additionally, remember that losing your job doesn't necessarily mean losing your health insurance; you can explore options like COBRA or purchasing a plan through Covered California.
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How to enrol in SHOP insurance
To enrol in SHOP insurance, you must first determine if your business is eligible. The Small Business Health Options Program (SHOP) is designed for small employers who want to provide health and/or dental insurance to their employees affordably, flexibly, and conveniently. To qualify for SHOP insurance, your business or non-profit organisation should typically have 1-50 employees. These employees must be full-time equivalents (FTE) and not include business owners, partners, or family members.
Once you have confirmed your eligibility, you can explore the SHOP insurance options available in your state. Some states may have their own websites for enrolling and managing SHOP coverage. You can choose to work with a SHOP-registered agent or broker or directly through your insurance company. It is important to note that specific enrollment steps may vary by insurance company.
When selecting a SHOP plan, consider your budget, desired benefits, and features. There are four categories of SHOP plans, each based on how the cost of care will be shared between your employees and the insurance company. You have the flexibility to offer your employees a single plan or multiple plans to choose from. Additionally, you can decide whether to provide only health coverage, only dental coverage, or a combination of both.
As you finalise your SHOP insurance choice, remember to review the important information, such as the plan name, metal level, plan type, and plan ID. Contact your insurance company and provide them with the necessary details to complete the enrollment process. Your insurance company or SHOP-registered agent/broker will guide you through any monthly deadlines and requirements specific to your selected insurance plan.
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How to choose the best plan for your business and employees
Offering health benefits is a major decision for businesses, and choosing the right plan is crucial to ensuring the well-being of your workforce. Here are some key steps and considerations to help you choose the best health plan for your business and employees:
Understand the Different Types of Health Plans:
Firstly, familiarize yourself with the different types of health plans available. The most common types include group health insurance, Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), and Exclusive Provider Organizations (EPOs). Each type has its own unique features and benefits. For instance, group health insurance is a traditional option that most employees are familiar with, but it can be costly. On the other hand, Health Reimbursement Arrangements (HRAs), such as Qualified Small Employer HRAs (QSEHRAs) and Individual Coverage HRAs (ICHRAs), offer more flexibility, especially for small businesses.
Assess Your Business and Employee Needs:
Consider the specific needs of your business and employees. Evaluate factors such as the size of your business, the number of full-time and part-time employees, their family situations, and their unique health requirements. By understanding your employees' needs, you can prioritize the most important aspects of a health plan, such as comprehensive coverage, deductibles, copays, or coinsurance rates.
Evaluate Cost and Coverage:
Consider the cost of the health plan and the level of coverage it provides. Evaluate the premium prices, deductibles, and out-of-pocket expenses. For small businesses, the cost of health insurance per employee can vary widely depending on location, plan type, and coverage levels. Additionally, keep in mind that a health plan is considered “affordable” if the premium is not more than 8.39% of the employee's household income (as of 2024).
Communicate with Employees and Insurance Providers:
Engage your employees in the selection process to gain valuable insights into their preferences and needs. Continuous communication with both your employees and insurance providers is key to maintaining an effective health plan. It ensures that any issues are promptly addressed and the plan remains aligned with your employees' needs.
Seek Expert Guidance:
Consult reliable online sources, such as government websites (e.g., HealthCare.gov) and professional health insurance advisory sites. Additionally, consider seeking guidance from professional insurance brokers or consultants who can offer tailored advice based on your business's specific requirements. They can help you navigate the legal aspects and ensure compliance with regulatory requirements.
Remember, choosing the best health plan for your business and employees involves a thorough assessment of your options, considering your budget, and prioritizing the well-being of your workforce.
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How to find group health insurance options for small businesses
As a small business owner, you may find the rising cost of health insurance challenging. However, not offering a comprehensive health benefit may cost more in the long run, as a recent survey found that 78% of workers would leave their current company if they felt their employee benefits package was lacking.
There are several small business health insurance options that can provide comprehensive coverage, and understanding your affordable options is the first step to finding the right policy for you and your employees.
Small Business Health Options Program (SHOP)
Small business owners can purchase health insurance coverage for their employees through the Small Business Health Options Program (SHOP) marketplace. Small employers (generally those with 1-50 employees) may be eligible to purchase coverage through SHOP. Enrolling in a SHOP plan is generally the only way for an eligible small employer, including non-profits, to claim the Small Business Health Care Tax Credit.
Health Reimbursement Arrangements (HRAs)
Health Reimbursement Arrangements (HRAs) are employer-funded group health plans from which employees are reimbursed tax-free for qualified medical expenses up to a fixed dollar amount per year. Unused amounts may be rolled over to be used in subsequent years. The employer funds and owns the arrangement. HRAs are sometimes called Health Reimbursement Accounts.
Health Stipends
Health stipends are not subject to as many regulations as HRAs or traditional group health insurance benefits. Employers can set their own employee classes, allowance amounts, and eligible expenses. By law, you can’t require your employees to use their stipend to buy a health insurance plan or ask them to show proof that they purchased a medical service or item. A health stipend isn’t a formal benefit, so it doesn't meet the ACA’s employer mandate for organizations with 50 or more full-time equivalent employees.
Private Insurance Company
If there are no SHOP plans available in your area, small business owners can work with a private insurance company or licensed agent or broker to find out what group plans may be available.
Online Services
Online services such as eHealth and UnitedHealthcare can help small business owners understand the rules and regulations for business health coverage in their state and navigate group health insurance for remote employees in different states. They offer personalized coverage solutions and a wide selection of plans from over 180 of the nation's leading insurance carriers.
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Frequently asked questions
You can find medical insurance for your employees through the Small Business Health Options Program (SHOP) at HealthCare.gov. You can also use UnitedHealthcare, which offers a range of group health insurance options.
You should consider the price, benefits, and features of each plan. You should also think about whether you want to offer your employees one plan or a choice of plans, and whether you want to include medical coverage, dental coverage, or both.
A health insurance plan is considered affordable if the plan's premium is not more than a certain percentage of the employee's household income. For 2024, this percentage is 8.39%, and in 2025, it will be 9.02%.
