5 Questions on Health Insurance Eligibility for Small Businesses
As discussions continue in Washington, DC, about the potential repeal, replacement, or “repair” of the Affordable Care Act (ACA), it’s a good time to look at how small businesses can offer health insurance to their employees, the tax benefits available to businesses, and what insurers look at when it comes to eligibility and the review of applications for employee benefits.
Let’s look at five of the questions small businesses like yours are asking?
Are all small businesses required to offer health insurance benefits to employees?
No. The ACA only requires certain employers with 50 or more full-time and full-time equivalent employees to offer health insurance. However, many businesses with less than 50 employees choose to offer health insurance as part of their broader employee benefits and retention program – and because of the available tax benefits.
What are the tax advantages of offering employee benefits?
The premiums you pay toward employees’ health insurance benefits are exempt from your company’s federal income tax and payroll taxes. Plus, the Tax Policy Center at the Urban Institute and Brookings Institute says the portion of premium paid by employees (if any) is typically excluded from their taxable income.
Employee Savings Example: The Tax Policy Center has calculated savings for employees in the 15 and 25 percent tax brackets based on a reduced taxable income and lower payroll tax (7.65 percent of which is paid by the employee), as shown below.
|Tax Savings for Employees (Based on $1,000 Health Premium)|
|25% Tax Bracket||$374|
Other advantages include additional savings on employees’ state and local taxes, access to benefits at a cost that could be less than comparable coverage through the individual marketplace, and reduced employee turnover and absence due to illness.
Is my business eligible to offer health insurance benefits?
The CaliforniaChoice multi-carrier, employee-choice health insurance program offers medical coverage from seven insurers to small businesses with as few as 1-2 employees. (All firms must include at least one employee enrolled in medical who is not a business owner or spouse/domestic partner of the business owner.) Employees must be permanent and actively working an average of 30+ hours per week.
Employees not eligible include those who are: 1099; commissioned; permanent employees eligible for medical health care coverage offered by or through a labor union; part-time, seasonal, temporary, or substitute workers; and employees on a leave of absence not categorized as FLMA, Workers’ Compensation, or Military.
You can learn more about CaliforniaChoice underwriting guidelines by linking to this pdf, or a broker. He or she will gladly set up a time when you can discuss the options available to businesses like yours.
How much should I expect to pay for my employees’ health insurance?
Working with your broker, you have the ability to set the amount you want to spend monthly on your employees’ benefits using Defined Contribution. You can choose to contribute a fixed dollar amount or a fixed percentage of the costs for your employees’ benefits.
Budget Example: You may choose 50% of the lowest-cost health plan. If the least expensive option available to your employees has a $100 per month premium, you could contribute $50 per employee per month.
Flexible Budget Options: At CaliforniaChoice, we offer you up to 12 different ways to define your employee benefits budget. Whatever amount you select, you can take comfort in knowing your premium is locked in for 12 months. And, at renewal, you can adjust your premium contribution – up or down – so you continue to have full control over your benefits budget for another 12 months.
The Right Plan: One of the best things about CaliforniaChoice is that it gives each of your employees the ability to choose coverage to match his or her individual or family health care needs. One might pick a PPO because it includes his or her preferred doctor or hospital in the health insurance carrier’s provider network. Another employee, who rarely visits the doctor, might choose an HMO from a different carrier. A third employee might choose an HSA-compatible plan from a third carrier because of the plan cost and tax advantages. Your Defined Contribution is like a health insurance gift card that your employees use toward the premium for their preferred health plan. If their cost exceeds your contribution, they simply pay the difference.
Are there other benefits I should consider for my employees?
Yes, beyond medical benefits, you and your broker may want to discuss options like Dental, Vision, Life, and Chiropractic & Acupuncture.
Plus, when you select CaliforniaChoice for your employees’ benefits, you and they get access to no-cost extras through our Business Solutions Suite. It includes discounted hearing and other services plus employee entertainment and other discounts, HR support, HSA resources, a free Flexible Spending Account, COBRA administration, and more.
CaliforniaChoice gives employers like you the ability to enhance your employee benefits program, while still controlling your costs. It offers coverage through seven leading health insurers: Anthem Blue Cross, Health Net, Kaiser Permanente, Sharp Health Plan, Sutter Health Plus, UnitedHealthcare, and Western Health Advantage. And it makes administration easy, too.
To learn more, contact your broker. Or, if you don’t already have a broker, we help you find a CaliforniaChoice broker to speak with about a quote for your employee benefits.