Find out how small business health insurance plans work in California.
With the largest state economy in America, California is home to many small and medium-sized businesses. If you are a California business owner, then you may be wondering how group plans for health coverage work in your state.
Continue reading to learn about small business health insurance in California.
How to qualify for small business health insurance in California
According to the Covered California website, to be eligible for small business health insurance in California, your company needs to meet certain requirements for contributions and participation, including:
- Your business has between 1 and 100 eligible full-time or full-time equivalent employees.
- The majority of your business’s eligible employees live in California.
- At minimum, at least one of your employees receives a W-2 form.
According to the employer mandate in the Affordable Care Act (ACA), business owners with 50 or more full-time or full-time equivalent employees are required to offer health coverage to their employees.
Also, as per the ACA, small business owners with less than 50 full-time employees are not required to offer group health insurance to their employees. If you do decide to offer group health insurance as a small business in California with less than 50 full-time employees, then that health coverage must meet the ACA’s minimum standards and requirements, which include:
- Coverage of the 10 essential health benefits.
- No annual or lifetime benefit maximums.
- Adherence to the ACA’s built-in consumer protections.
If you are the owner of a sole proprietorship in California, you should know that you usually would not qualify for small business health insurance unless you had eligible full-time or full-time equivalent employees. Instead, as a sole proprietor with no employees, you would qualify for individual health insurance in California.
Qualifying for the small business health insurance tax credit in California
As a small business owner in California, you may be eligible for a health tax credit. The ACA created this tax credit to help small businesses afford the cost of group health insurance for their employees.
Generally, the three primary requirements to qualify for a small business health insurance tax credit in California are:
- Your business has 25 or less full-time or full-time equivalent employees.
- Your business pays an average annual salary or wage of less than or equal to $54,000 a year per worker (this amount is indexed annually for inflation).
- Your business contributes at least 50 percent toward paying for the cost of employee premiums.
If your California small business does qualify, then the maximum available federal tax credit could reimburse your company for up to 50 percent of the premiums you pay for the medical, dental, and vision health insurance of your employees. Once your California business qualifies, it is important for you to know that the tax credit is only available for a total of two consecutive years.
If your California business has less than 10 full-time equivalent employees who are paid wages less than $25,000 annually, then your company may be eligible for the maximum tax credit amount.
How to find small business health insurance in California
You can use eHealth to find affordable group plans for your small business in California. As an authorized federal government partner, eHealth can help you choose small business health insurance from among California’s most popular and leading brand-name health insurance companies including, but not limited to:
- Anthem BlueCross
- Blue Shield of California
- Kaiser Permanente
It’s fast, free, and easy to use eHealth to get group plans for your California small business. With eHealth’s online marketplace, you can compare plans from multiple insurance companies, find personalized quotes, and get unbiased advice from licensed health care agents. Visit eHealth today to learn more about California health insurance plans that work for you and 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.