IMPORTANT!! The rules governing "small" businesses are changing on January 1, 2016 . . . don't be caught by surprise!
The definition of "Small Group" increases to include businesses with up to 100 full-time -- OR FULL-TIME EQUIVALENT -- employees. What is "full-time"? A single employee who works 30 hours per week or more, is a full-time employee. However, two employees who each work 15 hours per week are the equivalent of one full-time employee. In other words, a business with 200 employees, none of whom works 30 hours per week, but who each work 15 hours or more per week has the equivalent of 100 full-time employees.
Why is this important? If your business or employer with up to 100 employees fails to offer health insurance to its eligible employees, and those employees turn to Covered California for health insurance and receive premium tax credits, the employer could be liable for a "Shared Responsibility Payment" of up to $3,000 for each employee who obtains premium tax credits.
On the other hand, a health insurance plan can be designed for your small business that complies with this ACA requirement and costs the company as little as $100 per employee -- and that cost is fully deductible as an employee business expense, so it really costs you nothing other than the cash flow effect, to provide health insurance for your employees. Businesses are not required to provide coverage for dependents or to pay for dependent coverage if they do offer it. And employees may be given the option to "buy up" to a higher tier health plan with enhanced benefits and lower out-of-pocket costs by paying the additional premium expense without any added cost to the employer.
Want to attract and retain good employees? Provide access to Qualified Health Plans at attractive group rates!
Businesses that offer employee benefits such as health insurance, life insurance, and retirement plans consistently report that their ability to attract and retain good employees is greatly improved. This often leads to increased profits for the business thanks to the reduced employee turnover that results. Employees who feel appreciated are more productive.
And not only will you obtain a valuable business tax deduction for the premiums you pay, but your business may also qualify for IRS premium tax credits to help reduce the out-of-pocket cost to your business for the premiums you pay. Businesses with fewer than 25 full-time equivalent employees earning an average of $50,000 per year or less may be eligible for tax credits to help pay for health insurance for employees and their dependents. The rules are somewhat complex, and the tax credit is currently limited to a maximum of two years, but if your business is willing to pay 50% or more of the employee-only cost, the IRS will help you pay up to 50% of your portion of the premium cost (you do not have to pay premiums for an employee's dependents).
The Covered California Small Business Health Options Program ("SHOP") allows your business to choose one of the four metal tiers of health benefits -- Bronze, Silver, Gold, and Platinum -- and to identify the one "benchmark" plan you agree to pay at least 50% of the employee's premium. Employees may choose from among any of the plans available on that benefit tier, and will pay the difference between your benchmark premium and their cost of insurance through payroll deduction. The ability of employees to select the plan that best fits their needs -- including choosing a plan in which their current physician is a participating provider -- is an attractive benefit.
Additionally, premiums for small groups are significantly lower than those available to persons in the individual market. If your business has at least one employee not related to the owner, both the business owner and the employees are eligible to enroll in small group health plans. Although the business is not required to cover an employee's spouse and dependents, it may offer them coverage, and the business is not required to pay for any portion of the dependent premium. For example, the employee-only cost for a silver plan may be $300 per month. The cost for a spouse might be $275, and for two children under age 18, another $300, a total of $875 per month. The business must pay at least $150 of the employee-only premium, but if the employee wants to add the spouse and children, the added $575 cost would be the employee's responsibility. Of course, the business may choose to pay a portion of the dependent.
There are currently six insurance providers participating in the SHOP program. There are both HMO and PPO options, as well as health savings account ("HSA") - compliant plans for businesses that want to give employees more control over how to spend their health care dollars ("consumer-driven" health plans).
YOU Have more options than you may think . . .
Whether you business is eligible for tax credits or not, or is interested in obtaining additional "value-added" benefits and services in lieu of obtaining tax credits, there are also "private exchange" options which may be offered to employees, with plans available from a number of additional insurance companies not participating in SHOP -- increasing employee choice to as many as six or eight different plans on each metal tier. Value-added benefits for small businesses purchasing health insurance through a private exchange include discounted payroll and bookkeeping services, dental and vision benefits, and additional employee benefits such as discounted fitness club memberships at low- or no-cost to the business. And you can also choose to offer just one or two health insurance companies' plans to your employees, and we'll help you identify the plans with premiums that won't exceed 9.5% of your employees' wages.
As a Covered California Certified Insurance Agent, Max Herr is ready and able to assist businesses with both on- and off-Exchange small group health insurance options and other employee benefits, including group or individual life insurance, supplemental critical illness and disability benefits, and long-term care insurance. Click on the link below to contact us.