Should a Small Business Have Group Health Insurance?
Published on January 11, 2018
If you are a small business owner, you may have thought about whether or not you should offer health insurance to your employees. Read on to see what a group health insurance plan is, how you can get it at a reasonable cost, and why it might help your business in more ways than you thought.
What are group health insurance plans?
You may not be required to offer a group health insurance plan for the employees of your small business at all. You can read more about whether or not a group insurance policy for employees is mandatory for your business here. In most cases, small businesses with fewer than 50 full-time employees are not required to provide group insurance policies for employees who work for them. But there are still plenty of perks to offering your employees health insurance, some which even benefit you as the employer.
Healthcoverageguide.org defines a group policy as a “single policy issued to a group that covers all eligible employees and sometimes their dependents.” This definition is just the start, though, so let’s explore more details about group health insurance.
Difference between group and individual health insurance plans
Group insurance is generally provided to employees by an employer, while individual insurance policies are bought independently by the employee. A group health insurance plan usually has the following basic characteristics:
- Choice of a few different health insurance plans (smaller companies may have fewer choices or offer only one plan)
- Reduced premiums (since the employer usually pays for some of it)
- Employee’s portion of premium deducted from paycheck (making taxable income lower)
- Resources to help employees understand the plan they choose
On the other hand, with an individual policy, people shop for their own insurance plans. They typically don’t benefit from factors such as shared premium costs, nor from having the cost of the premium taken from pre-taxed income. It’s reasons like these that make having a group health insurance plan incredibly valuable to your employees.
What else should I know about buying health insurance as a small business owner?
In many cases, coverage from a group health insurance plan can be extended to the legal spouse and dependents of the employee. Obamacare (the Affordable Care Act) also mandates that plans must permit coverage of adult dependents through age 26. This means that any employees’ dependents over that age might not be covered in the group insurance policy for employees.
Small businesses with fewer than 50 full-time employees are generally not required to offer health insurance, but if they do it must be the same level of coverage for all full-time employees, and it must be Obamacare-compliant. Because some small businesses with fewer than 50 full-time employees are not required to offer health insurance, there is a tax deduction that may apply to them if they pay for at least half of each employee’s premium.
Find the right group plan for your small business
Now that you know the basics of group health insurance, it’s time to set out into the market and search for a plan that fits you! Visit eHealth.com to get free quotes on group health insurance.
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.