When it comes to employee benefits, health insurance ranks high on the list of desirable and, to be honest, expected perks of an employer. Attracting and retaining good employees and maintaining competition in a volatile hiring environment also motivates most employers to offer these benefits.
In addition to health insurance, many employees expect to have options for both vision insurance and getting good dental insurance as well.
The challenge for all businesses, but for small business owners in particular, is the ability to “pay the bill” for these employee benefits.
California Health Insurance, Health Insurance Premiums, and ACA
For small California employers, providing health insurance options as employee benefits is a great way to compete for quality employees and increase employee retention. But it comes at a cost.
However, despite what some may believe as a result of the Affordable Care Act, or ACA, the employer is not required or authorized to provide health coverage benefits to employees.
As the Kaiser Family Foundation pointing toAnd the
“The Affordable Care Act does not require companies to provide health benefits to their workers, but large applicable employers may face penalties if they do not provide affordable coverage. Under the Shared Liability of the Affordable Care Act, employers who do not provide coverage or do not provide coverage that meets Minimum value and affordability standards. These penalties apply to companies with 50 or more full-time employees. “
And as a single insurance provider NotesAnd the
“Employers must provide health insurance Affordable and provides minimal value to 95% of their full-time employees and their children until the end of the month in which they turn 26 or are subject to penalties. This is known as employer authorization.”
For employers with fewer than 50 full-time or full-time (FTE) workers, HealthCare.gov States,
“Any small business owner, generally those with less than 50 full-time employees and full-time employees, is not subject to Employer pay joint liabilityRegardless of whether they provide health insurance to their employees.”
So, the question is, if you choose to offer a California health insurance plan or options to your workers, which many small employers choose to do, how much do you have to pay for it?
The cost of health insurance benefits for small employers
If your company decides to offer health coverage to your employees, then you are typically required to pay at least 50 percent of employee premiums as a small business.
Of course, that can increase quickly if you have more than 10 employees for example.
For example, according to Kaiser Family Foundation (KFF)Last year in 2021, the average cost of employee health insurance premiums for family coverage was $22,221. The average annual premium for individual plans was $7,739.
While employers are required to pay at least 50 percent of these premium costs, it’s usually a bit more.
As determined by the KFF, in 2021 the average cost of health insurance for employers was $16,253 per year, or 73% of the premiumfor family coverage and $6440, or 83% of the individual premium.
The website at HealthCare.gov offers several Tools and calculators For employers to use in determining costs and health insurance options for employees. Additionally, employers can learn about the Small Business Health Options Program (SHOP), the online marketplace where qualified employers can find coverage options to offer their employees and where their employees can shop for insurance.
Another question employers ask when it comes to assessing the affordability of offering health insurance in California for their workers is can you deduct health insurance premiums?
While this topic is somewhat complicated, the simple answer is that the employer’s contribution in the form of employee premiums is a business expense, so these are deductible costs. To be eligible for this discount, employers typically have to pay at least half of their employees’ premiums.
Additionally, employers can also deduct contributions made to an employee health savings account (HSA). This is a type of pre-tax savings account, not a health plan, that can be used with a High Deductible Health Plan (HDHP). In general, all contributions to an employee’s HSA are a deductible business expense for the employer.
However, it is best to conduct due diligence about this and other employee health insurance benefits at a professional company such as JC Lewis Insurance.
Your local small business source for health insurance in California
JC Lewis Insurance is a longstanding family owned business of expert brokers here in Sonoma County. We offer California health insurance plans from many of the leading health insurance companies.
We are licensed and approved by each of these insurance companies to offer coverage to individuals, families, and employers in small groups, along with supplement and prescription drug plans for seniors.
When you’re shopping for vision, dental, or health insurance for your employees or for you and your family, you likely have many questions and concerns.
We understand that providing California health insurance options to your employees can be a daunting and complex task and that you will likely have many questions and concerns. At JC Lewis Insurance Services, we welcome your questions about insurance coverage and you can trust that we will help you find the right solution.