At what point should a business start offering health insurance benefits?

Companies come in all sizes and with varying numbers of employees. The classification of “small” and “large” companies varies greatly by agency or purpose.

For example, one source Regard The Affordable Care Act (ACA) defines small to medium-sized businesses as falling into one of three distinct categories: those with fewer than 50 employees, those with 50-99 employees, and those with 100 or more employees.

According to recent statistics from the SBA, small businesses make up 99.9% of American companies and employ 47.1% of American employees.

However, the Small Business Administration’s definition of “small business” is a bit complicated. For example, the SBA defines small business by company revenue (ranging from $1 million to more than $40 million) and employment (from 100 to more than 1,500 employees), according to United States Census Bureau.

Why is all this important? Because small business owners often struggle with the question of when they should (or can afford) to start offering health insurance to their employees.

And size matters.

Business growth and health insurance in California and you

Of the small businesses in the United States that have employees, more than 5,000,000 of them only have between 1 and 19 employees.

As an employer, if your business has, say, only 10 employees, you may want to offer them health insurance benefits even though your company is not required to do so by the ACA. But as a company with only 10 employees, can you realistically start offering health insurance?

Considering that you will be required to cover at least 50 percent of the monthly premiums for your business which can range from over $7,800 for individuals to over $22,000 per month for family coverage, can you budget for that?

As a conscientious employer, you definitely want to provide your employees with the best employee benefits that your company can offer. For example, in addition to health insurance, you will likely want to offer good dental and vision insurance as well.

You are likely relying on continued business growth that will relieve financial pressure to fund health insurance costs and obligations. The ability to attract competent employees and retain those you already have are key elements to sustaining business growth. But the possibility of significant upfront costs may also prevent you from making the decision.

At JC Lewis, we can help make this decision easier for you.

A short meeting with one of our licensed employees will provide you with more than enough knowledge to make an informed decision and choose among the two or three plans that best meet your specific needs.

In fact, the easiest way to find the best California health insurance plans available for your company and your employees is to submit a quote proposal for a group health plan. There are no obligations on you or your company and it only takes a few minutes to fill out the group’s detailed information and submit a proposal request.


Big Employers, Business Growth, and Health Insurance in CaliforniaBig Employers, Business Growth, and Health Insurance in California

In the Affordable Care Act lexicon, in addition to the small business categories, there are also what are known as “viable large employers.”

What is a viable large employer?

according to website For the Office of Personnel Management (OPM),

“A Large Applicable Employer (ALE) is an employer with an average of at least 50 full-time employees. A Large Applicable Employer may be a single entity or it may consist of a group of related entities. If there is a group of related entities, They are referred to as ALE Members.”

This is important because, according to IRS terms,

If an employer has had at least 50 full-time employees, including full-time equivalent employees, on average during the previous year, then the employer is ALE for the current calendar year, and is therefore subject to the employer’s joint liability provisions and reporting provisions on the employer’s information.

As an employer of 50 or more employees, you must provide health insurance, but it is not required. However, there is a penalty that the IRS estimates at $2,570 per full-time employee minus the first 30 workers.

The simple scenario is that an employer with 50 employees chooses not to incur the expense of providing employee health insurance and chooses to pay the fines instead. So, for 20 employees over the first 30, the employer can look for fines of $51,400.

Most reasonable employers would agree that choosing employee health benefits would be a more cost-effective and productive option.

Want to know if your company qualifies as an ALE? The Society for Human Resource Management (SHRM) provides deep in resources A viable calculator for a large employer (ALE).

JC Lewis: When you’re ready to offer health insurance benefits to your employees

At JC Lewis Insurance, we want to be your insurance partner and offer only high-quality health insurance plans from leading health insurance companies licensed to do business in the states in which we operate.

We are a family owned and operated health insurance agency located in Sonoma County, California. As specialists in finding and managing medical insurance plans for companies large and small, we are licensed and approved by every insurance company we represent.

When you’re shopping for medical insurance for you and your employees, you likely have many questions and concerns. This is great because we welcome your questions about health coverage insurance and you can be confident that JC Lewis Insurance Services will help you find the right solution.


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