A hidden ACA waiver and fluctuations in costs could make it more affordable.
We’ve all been there. You spend oodles of time researching before purchasing the right cable or streaming package only to “set it and forget it” and not revisit what’s changed in the market.
But then the prices skyrocket after the 2-year guarantee, the carrier drops a favorite channel, or a new service comes to market with everything you need at a lower price, and all of a sudden you’re paying more and getting less.
Similarly, if you’ve shopped for small business health insurance in the past but found it too expensive for your budget, you may want to look again. It might not make the front page news, but laws and other factors may have changed during that time that have made it more cost-effective.
Researching all the options and the latest Affordable Care Act (ACA) regulations can be overwhelming. After all, you’ve got a business to run.
Benefits of offering insurance for your employees
Pew Research Center showed 43% of workers cited benefits like health insurance and paid time off (PTO) as a major reason for changing jobs. And, in most cases, individual insurance coverage costs more and has a narrower provider network to choose from.
We know that benefits (along with payroll) are the biggest costs associated with your budget. However, it’s still critical for small- and medium-sized businesses (SMBs) to provide health insurance if possible — or legally required — in order to recruit and retain happy and healthy employees.
Factors that can change and factors that you can choose
Premiums can dramatically shift from year to year, state to state, and region to region. Additional factors also determine the affordability of your small business health insurance, including:
- Age of your employees and their dependents
- Tobacco usage
- Location of residence
- Total number of employees
- Number of employees who choose to participate in the plan
Factors you can choose to determine your costs include:
Employer contribution requirements
Most health insurers will require you to pay at least half the insurance premiums for your employees, at minimum. That’s also the requirement if you want to claim the federal small business health care tax credit.
You can also use that requirement as a baseline to roughly estimate how much it will cost you to offer coverage for your employees. Factor the average annual cost of an individual and divide it by two (if you’re paying half).
Employee participation requirements
Most health insurers typically require 70-75% of your full-time employees to participate in an employer-offered health plan, after qualified waivers. A qualified waiver can include having an insurance plan from a spouse, the government, or the individual marketplace.
This presents a challenge to small businesses because they often struggle to meet one or both of the contribution or participation requirements. But, with a little-known special waiver, you may be able to meet those challenges.
With a special waiver, timing can be on your side
Unlike other types of health insurance, you can shop for small group coverage any time. But, there’s an obscure part of the ACA that makes group insurance more affordable for small business owners.
That’s because insurers must waive their minimum employer-contribution and employee-participation rules once a year. The ACA requires a one-month special open enrollment window for Jan.1 coverage from Nov.15-Dec.15, and allows eligible small group employers to enroll for this coverage to be effective Jan.1 of the following year.
So, if you have an inception or renewal date of Jan. 1, you aren’t required to contribute to employees’ premiums. If your inception or renewal date is during any other time period, you’ll be subject to the participation and contribution requirements.
This scenario could also be a “group of one.” Note, some states have a “group of two” minimum, and a spouse scenario may or may not satisfy that requirement.
States’ rights above all
States also continue to change rules and regulations for small business health insurance. So be sure to work with your broker to keep up with any new legislation that might make offering coverage more feasible for you.
In many states, group insurance may be less expensive per person, have lower financial exposures, and have access to larger Preferred Provider Organization (PPO) networks.
Work with a broker
Even if group insurance doesn’t work out for your business this year, revisit for next year. Regulations and insurance premiums may shift, and it’s always a good idea to have the latest information.
Working with a broker is a great way to stay on top of things, as they can follow the regulations and fluctuations so you don’t have to. If you need to find a broker, contact us at firstname.lastname@example.org, and we will connect you with one that offers Ease for free.
Ease can help
From open enrollment to ACA, our powerful tools bring your entire HR department online, sync with benefits, and help you make compliance easy while avoiding IRS penalties and fines.