Is your business too small for group insurance?


Almost every small business owner works hard to make their business a quality operation. This often includes providing their employees with as many benefits and perks as possible.

This is partly due to the desire to be a “good employer” and reward their employees, and partly to the need to be adequately competitive in the labor market. Smart employers understand that in order to attract and retain a high-quality workforce, offering a desirable benefits package is a huge advantage.

However, small businesses that are truly “small” in that they have fewer than 10 employees, for example, might wonder if they are too small an organization to have group health insurance.

Health insurance is a major expense for employees

Everyone from business owners to employees is aware of the rising costs of health care over the past decade or so.

As one recent article mentionedAnd the

Insurance is one of the biggest expenses for companies and individuals alike. According to the Kaiser Family Foundation (KFF), average annual premiums in 2021 were $7,739 for individual coverage and $22,221 for family coverage.

Over the past year, the average insurance premium for both individual and family coverage has increased by 4%. Even more shocking, the average household premium has increased by 47% since 2011 and 22% since 2016.”

It all adds up to a great incentive for small businesses to offer group coverage to their valued employees.

Not all companies are required to offer health insurance

This is an issue that is often confusing for business owners, especially since different states have implemented their own requirements along with those of the Affordable Care Act (ACE).

But as One source pointed out,

Under the Affordable Care Act (ACA), large employers (ALEs) with 50 or more full-time employees (FTEs) must provide affordable health benefits that meet minimum essential coverage (MEC) or be subject to a penalty. But small businesses are not subject to such obligations.

These “small businesses” are typically those with 49 or fewer full-time equivalent employees.

In addition, there are additional incentives offered to employers with fewer than 25 workers such as the Small Business Health Care Tax Credit which can be up to 50 percent of the costs employers pay for their employees’ premiums.

As HealthCare.gov website explains,

“Enrolling in a Small Business Health Options Program (SHOP) plan is generally the only way for a small business or not-for-profit to claim the Small Business Health Care Tax Credit. To qualify for the tax credit, all of the following must apply:

  • Have less than 25 full-time employees (FTE)
  • The average employee salary is about $56,000 per year or less
  • You pay a minimum of 50% of your full-time employees’ premium costs
  • You offer SHOP coverage to all of your full-time employees. (You do not have to provide it for dependents or employees who work less than 30 hours per week to qualify for the tax credit.)

Additionally, the tax credit is higher for companies with fewer than 10 employees who earn an average salary of $27,000 or less. Basically, the smaller the business, the higher the credit.

Therefore, for many small businesses, it can be especially beneficial to offer group health coverage to their employees even if they have fewer than 10 workers.

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How group health coverage differs for small business owners from large employers

The single most important factor differentiating between “small group” and “large group” coverage is the number of employees.

The requirements to participate in small group health insurance for your organization to qualify for group health insurance are as follows:

  • Your business must consist of 2 to 49 full time employees
  • Fulfill the minimum participation requirements specified by the insurance company

In the case of part-time employees, it’s a bit more complicated. You will need to convert each part-time employee’s hours into equivalent full-time employees based on the 30-hour minimum.

Are you a small group?

The size of your health “pool,” i.e. the number of full-time employees, is an essential deciding factor in obtaining corporate group health insurance.

Essentially, the size of your group is determined by the number of full-time exempt employees, or FTEs. Typically, full-time employees work 30 or more hours per week, or 120 hours per month. Part-time employees are usually counted as those who work less than 30 hours per week.

In addition, you must include all of the following types of employees in your accounts:

  • Those in sister, subsidiary and parent companies
  • All full-time, part-time, and seasonal workers

So, how do you get small group health insurance for your business? One source Explain this way ,

If you meet the requirements to participate, you can apply for group health plans for your small or large business. You can do this by:

  • Approach the insurance provider directly
  • Buy a plan through a broker

Unlike individual health plans, group health insurance does not come with an open enrollment period. Meaning, you can sign up for a plan when you’re ready to sign up for one.

After signing up, your premiums are locked in for a year. During this time, you can add or delete employees and dependents at any time, but the premiums remain unchanged through the end of the plan year.

At the end of the plan year, you can either renew your existing plan or shop around for a new one.”

The bottom line is that for most small businesses with no more than two employees, get and offer Small group health insurance coverage can be a benefit to both employees and their families — and the employer!

JC Lewis is your partner in small group insurance

At JC Lewis Insurance, our goal is to be your preferred insurance partner.

We have over four decades of experience and continue to provide high quality health insurance plans. JC Lewis works only with leading health insurance companies that are licensed to do business in the states in which we operate.

As a family owned and operated health insurance agency located in Sonoma County, California, we are also a small business and understand the special needs and challenges that business owners face. In addition to being specialists in finding and managing medical insurance plans Small tradeWe are also authorized and approved by every insurance company that we represent.

So, whether you’re considering small group health insurance for you and your employees, or you’re simply looking to make changes to your existing plan, you likely have many questions and concerns.

At JC Lewis, we always are 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.

JC Lewis – Your go-to partner to help you make the right decision for your health coverage needs.

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