What kind of Health Insurance a small business selects could save thousands of dollars. The criteria used to select the right health coverage your company are as follows:
It is not a requirement that businesses offer health insurance.
First, how many employees your company has will determine how much to budget and which type your business qualifies for. Many small businesses are unable to meet minimum participation requirements or afford traditional group insurance. In this case, a Health Reimbursement Arrangements (HRA) are the best option.
Type of Employees
Does the business employ seasonal workers? Full and/or part time employees? Your employee makeup will determine which insurance policy to select.
Does the company have employees based in multiple states? Businesses will have a hard time finding a single, traditional group policy if employees are resident in multiple states.
Types of Health Insurance
Traditional Group: Purchased through an insurance broker and administered by an insurance company. The expense of the plan is distributed across the company’s employees. The larger the employee base, the lower the overall premium per employee. Group health care coverage is relatively expensive. In 2019 the average cost per employee was $5,946 annually.
Health Reimbursement Arrangements (HRAs): A reimbursement for health expenses. Employees select their own policies and submit the expenses to the employer for reimbursement. Reimbursements are free of payroll taxes for the employer and income tax free to the employee. Using HRAs allows employees to choose a plan right for them and allows the employer to set a cap on the allowance.
QSEHRA – Qualified Small Employer HRA is restricted to businesses with fewer than 50 employees without a group plan.
ICHRA – the Individual Coverage HRA can be used by any small business and reimburses employees for money spent on health insurance.
Health Insurance Stipend – employers simply pay employees a stipulated amount for health care. Works well for companies that can not afford a full-blown health benefit. Considered additional income, stipends are fully taxable as income to the employee.
Hopefully this gives you a start is grappling with the issue of Health Care Insurance. The thought should always be what is best for the employees while being financially feasible for the company.
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