Navigating the health insurance marketplace is daunting, and with the addition of the Affordable Care Act (ACA) it can feel near impossible to find which health insurance plan and purchase method best fits your business. Small businesses have a few options when purchasing health insurance for their employees. We briefly explore three choices employers have when buying health insurance.
Beginning in 2015, the employer mandate required businesses with 100+ full-time and full-time equivalent (FTE) employees to provide group health insurance to FTEs. Starting in 2016, employers with 50+ FTEs are also subject to this mandate. As we get closer to open enrollment, it is important to consider the health care plan options available to business owners and their employees. Business owners can consider the following three options:
Purchase small group health coverage directly from a carrier.
Business owners should consult with a broker or provider for assistance in selecting the ACA-compliant health coverage options best suited to meet the needs of their business. ACA-compliant plans must cover at least 60 percent of the plan’s total cost of incurred benefits, and must be affordable (employee’s contribution shouldn’t be more than 9.5 percent of average household income).
Purchase small group health coverage on the federal health exchange.
Business owners can buy coverage throughout the year on the federal exchange (meaning they are not limited to enrolling only during the open enrollment period). If a health plan is purchased before the 15th of the month, coverage should begin on the first of the next month. Business owners can use an insurance broker to enroll off the exchange as well.
Here is more information for employers on “state health exchanges.”
It is important to note that there is a one-month period (November 15 to December 15) when small business owners can buy coverage without meeting the normal minimum enrollment requirements.
Typically, employers must enroll at least 70% of their employees in a plan in order to obtain coverage. During the month-long special enrollment period, that stipulation is waived.
When an insurer offers a plan on the exchange that is similar to one offered off the exchange, the rates are the same.
Recommend employees purchase individual coverage.
Either through federal or state exchanges, or directly from a carrier.
Individuals can shop for insurance on the exchange, even if their employer offers health insurance. Premiums for individual exchange coverage cannot be paid pre-tax, they must be paid post-tax. If an employer is reimbursing an employee for individual healthcare premiums that must be paid post-tax as well.
Employers must notify their employees of general information about the Marketplace, how to access it, and of their right to purchase insurance through a federal or state health exchange should they decide to do that.
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