Learn what your obligations are for group health insurance in 2019.
Employees usually prefer jobs when employers provide health insurance. Sometimes, they value medical benefits even more than extra pay. A savvy employer also understands that the company may benefit from better retention, improved health, and even the satisfaction that offering small business health insurance can bring.
At the same time, some small business owners don’t believe they can remain competitive and profitable if they have to shoulder the expense of offering small business health insurance. According to the Kaiser Family Foundation, just about half of all U.S. employers provide health insurance to employees.
Must employers provide small business health insurance in 2019?
Even with the Obamacare Individual Mandate, employers never were forced to offer small business health insurance. Larger companies may have faced a fine for failing to offer group coverage, and some small businesses could have missed out on a health-care tax credit. However, the 2017 Tax Cuts and Jobs Act repealed the mandate (according to Nolo Press), so employers might not face penalties in 2019 for failing to offer qualified group health plans.
Even though companies aren’t legally required to provide health insurance, many can still benefit. The health-care tax credit might still apply in 2019. Small business can qualify with:
- A maximum of 25 full-time employees
- An average salary of no more than $50,000
- Payment of at least half of the premiums
- Purchase of a Health Insurance Marketplace plan through a partner like eHealth or the Marketplace
Typically, smaller businesses with lower average salaries can qualify for a higher health-care tax credit. For example, businesses that employ fewer than 10 people and pay average salaries of less than $25,000 qualify for the most in credits. These credits can make the purchase of small business health insurance much more affordable, because they can be used to defray the cost of premiums in the year that they’re earned, or saved to be applied against a tax bill.
Why do employers provide small business health insurance if they don’t qualify for tax credits?
Typically, only small employers that mostly pay modest salaries can qualify for a health-care tax credit. So why do many employers help pay for health insurance, even if they don’t qualify for that credit? There are plenty of reasons to get group health insurance for your employees, even if you don’t qualify for the small business tax credit.
Small business health insurance may help employers compete for good employees
According to the Bureau of Labor Statistics, large employers usually provide health insurance. So do most mid-sized companies and government employers. In contrast, just about half of companies will fewer than 100 employers provide small business health insurance. When it’s offered, employees often sign up, even when they have to pay a portion of the premiums.
This popular benefit can help improve morale, encourage proactive health care, and boost employee retention. In these ways, some employers believe they’re making a good investment by sponsoring a small business health insurance group.
Employers can still save money on small business health insurance premiums
Businesses can still buy Marketplace health insurance if they don’t qualify for health-care credits. They may still have a chance to deduct the cost as a business expense and ask their employees to pay a portion of the bill out of their paychecks. Also, many employers decide to purchase non-Marketplace plans.
Companies may make this choice because they find a plan that doesn’t qualify as an Obamacare plan, but costs less and suits their requirements better. In some cases, they may even want to purchase better coverage than the available Obamacare policies. For instance, some counties only have HMOs on the marketplace, and the employer may choose to buy a PPO.
Where do employers shop for small business health insurance?
One of the many benefits of shopping for small business health insurance through eHealth is that it’s easy to compare a variety of available group medical plans – not just the ones offered in the exchange. In addition to health insurance group policies, it’s also simple to compare and buy dental, vision – and all types of individual plans.
To get started, simply enter the number of employees and the company’s ZIP code in the online form. You can also speak with licensed health insurance brokers about small business health insurance by dialing the toll-free number. Even if you don’t have to offer health insurance, you may find that it’s a good choice for your company.
This article is for general information and may not be updated after publication. Consult your own tax, accounting, or legal advisor instead of relying on this article as tax, accounting, or legal advice.