Do Small Businesses Have to Offer Health Insurance

As the costs of health insurance continue to rise, it not only affects individuals, but the businesses that make their employee health care a priority. Small companies don’t have the cash flow that larger corporations do, often find themselves in a difficult situation when it comes to health insurance.

With the cost of covering one employee under group health rising nearly 200 percent over the last fifteen years, many small businesses are left wondering if they have to provide health insurance to their employees.

Providing Benefits to Employees

While small businesses are not required to provide health insurance to their employees, it’s a must if they desire to attract the talent their business needs. In today’s competitive job market, talented employees expect their employer to provide some health care benefits.

When it comes to providing health care benefits to employees, small businesses have a few options.

  • Businesses can give an allowance. Employers with fewer than 50 employees may set a monthly per employee allowance that is tax-free money. This is known as the Qualified Small Employer Health Reimbursement arrangement or QSEHRA.
  • Employee reimbursed purchases. Under QSEHRA there are quite a few expenses eligible for reimbursements, such as premiums for personal health insurance, copays, deductibles, and prescription drugs. This allows small businesses to maintain control over their budget and still provide a meaningful benefit to their employees. If your employees are seeking their own health care coverage, it’s essential that they keep the open enrollment dates in mind, open enrollment started on November 1 and will end on December 15th.
  • Traditional group health insurance. Employers with 50 or fewer employees may look into the Small Business Health Options Program (SHOP) marketplace. These are federally run or state-run exchanges that sell small group health insurance policies. The benefit of the SHOP marketplace could give employers a small business tax credit.

It’s important to consider all your options as you decide on the best way to provide coverage for your employees. Navigating this landscape could be difficult, that is why it is imperative to speak to a knowledgeable, friendly agent about what is the best option for your situation.  Each option will have specific qualifications and rules to follow. You’ll want to make sure that you are aware of them before you proceed.

To learn more about the responsibility of small business owners in providing health insurance to their employees, contact the professionals at at (855) 401-8383. Our licensed insurance experts will be happy to answer any questions that you may have.