Finding the right health insurance for your employees can be one of the most important responsibilities as a business owner. Though navigating the world of employee health insurance may sound like an arduous process, business owners who undertake the proper research can simplify finding the best solution for their company and their employees.
Finding the right coverage for your employees means knowing about the major laws that govern health insurance. It also means knowing how these laws apply to your company depending on factors like the number of individuals you employ and where your company is located. This guide will help you find the answers to those questions by:
- Briefly detailing relevant health insurance laws
- Listing the factors that providers and exchanges use to categorize your company
- Discussing how to implement a health insurance policy for your employees
Understanding health insurance laws
There are several federal laws that affect employee health insurance. These laws govern everything from how business owners shop for insurance to how those plans can be presented to your employees. This section of the guide covers only those laws that are most pertinent to finding and implementing insurance at your company.
Patient Protection and Affordable Care Act (ACA, Obamacare). The ACA (or Obamacare) is a cornerstone of modern health insurance policy. The act enshrined several changes to how companies can shop for employee health insurance, including the introduction of new tools, policies and guidelines. As a business owner, you may already be aware of how the act impacts shopping for employee health insurance, but that information will be covered in the next section.
Employee Retirement Security Income Act of 1974 (ERISA). ERISA applies to all privately employed persons in the United States. ERISA contains many policy guidelines, but there are two that are especially relevant to employee health insurance. The first of these guidelines stipulates that all health insurance policies offered by a company must be presented in a format that employees can understand. Additionally, business owners are obligated to inform their employees of any major changes they’ve made to the company health insurance plan(s).
Health Insurance Policy and Accountability Act (HIPAA). HIPAA lets employees obtain health insurance if they get a new job or lose access to a previous insurance plan. More importantly, the law stipulates that these individuals cannot be denied coverage if they have a preexisting condition. If you already have an employee health insurance plan, and that plan includes a preexisting condition policy, it’s a good idea to ensure that any new employees who were on HIPAA present a certificate detailing their creditable coverage. You can then take that coverage into account if your policy contains a preexisting condition exclusion (remember that insurers only send certificates to employees once their HIPAA coverage ends).
State laws. In addition to federal laws, each state has its own regulations for employee health insurance coverage. These laws vary from state to state, as do their interactions with the aforementioned federal regulations. It’s never a bad idea to check your state’s regulations. Doing so may help you reap additional benefits or even avoid a penalty.
Finding the right coverage for your employees means knowing about the major laws that govern health insurance.
Do you need employee health insurance?
There are several factors that govern how and when your employees can receive health insurance — the most important one is your company’s size.
If you employ fewer than 50 full-time or full-time equivalent (FTE) individuals, you are not legally obligated to provide health insurance to all of them. Even though you don’t have to offer in-house insurance, it can be a major factor in employee retention. Many employees expect their company to provide a health insurance plan and may not stick around if they can’t insure themselves and their dependents. Some employees interpret company-sponsored health insurance as a sign that their employer values their contributions, which can have a positive impact on their productivity.
Paying for health insurance can be expensive, but the Small Business Health Care Tax Credit can help cover the cost of insurance. The tax credit percentage varies depending on the number of people you employ and how much you pay them annually. Whether you use this credit or not, be aware that you’ll also need to file an annual return for each employee that you cover.
If you employ more than 50 people on a full-time or FTE basis, you must provide a coverage plan or risk paying a hefty fine to the IRS: $2,000 for every employee besides your first 30 workers. In other words, if you employ 100 people but fail to provide coverage, you risk a $140,000 fine for that year (some exceptions may apply if you provide coverage during some, but not all, months of the year).
If your company falls into this category, you must be able to provide insurance for at least 95% of your employees and their dependents. Like small businesses, large businesses must also file returns for their employees.
Additional rules and regulations may apply depending on the state that your company is incorporated in. Many policy providers take such local legislation into account when they offer their plans in areas where those regulations are enforced.
Shopping for employee health insurance
Now that you know the major laws behind employee health insurance and how the size of your company determines your coverage obligations, it’s time to discuss the tools that you can use to find the best health insurance for your employees. A few of these tools are open only to businesses of a certain size, but there are methods and best practices that all business owners can bear in mind as they shop for coverage options.
If you employ fewer than 100 employees, there are several tools that you can use to find ideal coverage for your workers. One resource is the Small Business Health Options Program, or SHOP, which is integrated into HealthCare.gov and makes it easy for small business owners to search for plans. Additionally, SHOP automatically integrates with your state’s local insurance exchange and can even help you determine if you qualify for a tax credit.
Companies with more than 100 employees are not able to utilize SHOP, however there are plenty of other ways to find an insurance plan without using it. For a start, you can still see the healthcare plans offered in your state’s health insurance marketplace. Many of these exchanges feature search functions that you can use to filter out individual plans and search only for employee coverage.
There are a few other employee health insurance factors that both small and large companies can take into consideration while searching for plans. For instance, does your business have offices in multiple states? If so, it may be wise to consider whether a single national plan or multiple state plans would suit your business best. National plans are easier to implement but are typically more difficult to find, as well as more expensive. Multiple state plans will give you more information to track, but finding state plans is easier than finding a national plan and the costs are typically lower.
Choosing a health insurance provider
If you already know of an employee health insurance provider that you’re interested in partnering with, it’s always a good idea to check what the offered plans and their costs. It’s also wise to check online reviews to verify how happy (or unhappy) current customers may be with that provider.
Once you’ve found a plan that fits your budget and contains the perks that you want to offer, you can reach out to that provider directly and discuss implementing it at your own company. It never hurts to ask any questions or bring up any concerns about the policy during this stage. You can then begin to implement that policy for your employees.
It’s worth reiterating that your state may have laws that affect health insurance and coverage. It can be helpful to keep tabs on those laws yourself, but insurance providers incorporate local legislation into their policy offerings as well.
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