A Guide to Small Business Health Insurance 2021
Health insurance is one of the biggest headaches for any HR department and small business. There are so many uncertainties around what kind of plan to provide, how much it will cost, how to administer the plan, and whether you even are required to provide a plan.
It doesn’t help that the rules and regulations have changed so much in recent years, from the introduction of the Affordable Care Act (ACA) by President Barack Obama in 2010, to attempts to repeal the act by the current administration, to the effect of the upcoming election on health insurance plans.
For small businesses trying to stay on the right side of the law while managing costs and trying to keep employees happy and healthy, this is all a lot to take in. That’s why we have created this guide that covers small business healthcare requirements and touches on the relevant health insurance laws.
What do small business owners need to know about health insurance requirements?
Some businesses are required by law to provide health insurance, while some are exempt. We’ll dive into these exemptions below, but there are basic requirements when it comes to providing health insurance to your employees.
Firstly, when you provide a health insurance plan, it must meet the benefit, coverage, and affordability standards set out in the ACA. You also have to offer all eligible employees some form of health insurance within the first 90 days of their employment.
Do small businesses have to provide health insurance under the ACA?
Small businesses that have fewer than 50 full-time employees (or the equivalent in part-time workers) do not have to provide health insurance under the ACA, which is sometimes referred to as Obamacare.
Since most small businesses have under 50 employees, this means most are exempt. If you have more than 50 full-time employees, you are required by law to provide health insurance.
The caveat to this is that laws do change, especially as political administrations change, so it’s important to have measures in place to keep up with the latest regulations. This could mean subscribing to industry publications and newsletters, consulting with legal experts, or even reading your HR software vendor’s blogs. The HR software Workday even provides training on dealing with the ACA.
What benefits are there to providing health insurance?
While you are under no legal obligation as a small business to provide health insurance, there are a number of reasons why you should consider it.
Providing health insurance will help you attract talent, as people prioritize benefits packages when searching for jobs. As a small business, you might not be able to offer the same compensation as large enterprises, but you can make up for that by offering attractive benefits, such as health insurance. In fact, two-thirds of businesses provide health insurance as a way to attract and retain workers.
Also, a healthy workforce is a happy workforce, and prevention is better than needing to find a cure. Providing health insurance shows employees that you care about their well-being, boosting morale, improving satisfaction, and helping retain talent.
How can I purchase a health insurance plan?
There is more than one way to purchase a health insurance plan. Here are the most popular for small businesses:
Group health insurance plans: You can buy these plans through the federally run SHOP Marketplace. This was the most popular choice for small businesses in the past, but due to the high costs and lack of flexibility, this is no longer an option for many companies.
Qualified small employer health reimbursement arrangement (QSEHRA): Set up by Congress in December 2016, QSEHRA is becoming an increasingly popular choice for small businesses. Under this arrangement, businesses offer employees a tax-free monthly allowance, and employees then choose and pay for their own health care using that money. The advantages of QESHRA are that it gives employees the flexibility to choose their own plan and it’s considerably easier to manage from an administrative point of view.
Association health plans: Small businesses can join with other small companies to buy large-group health insurance (which is reserved for companies with more than 50 employees). This works in the same way as a normal group health insurance policy.