Small businesses have important choices to make when offering health insurance, especially with new Affordable Care Act regulations and the increasing cost of traditional small business health insurance.
Here are five frequently asked questions (FAQs) about how to navigate small business health insurance and the Affordable Care Act in 2014.
1. What small business health insurance options are there in 2014?
While there are numerous plan options on the market, it essentially boils down to these five main options for health insurance coverage:
Individual Health Insurance (with or without a defined contribution allowance)
SHOP Marketplace (a group health plan)
Private Small Group Plan
2. How does the Affordable Care Act impact small businesses and their employees?
Small businesses (with fewer than 50 full time employees) are less impacted by the Affordable Care Act, because they are not subject to the "employer mandate" provision. In other words, there is no requirement for small businesses to offer health insurance, and small businesses are not subject to a penalty if they do not offer traditional health insurance.
What about employees? Under the Affordable Care Act:
All employees must be enrolled in health insurance in 2014 (by March 31, 2014) or else pay a fee at tax time. There are some exceptions, but most Americans are subject to the "individual mandate".
There are new ways to purchase insurance for employees who are not offered health insurance through work. Most significantly, eligible employees have access to discounts on health insurance with the premium tax credits through the new health insurance exchanges.
3. How are small businesses dealing with the cost of health insurance?
One of the biggest challenges for small businesses is: how do you offer employees access to quality health insurance, while controlling the cost of the contribution? Here are common strategies for controlling the cost of small business health insurance:
Maximize the benefits offered with employee education
Motivate employees to focus on preventive care and wellness
Focus on the benefits your employees care most about
Transition to a Consumer-Directed Health Plan (CDHP)
Transition to a Pure Defined Contribution Plan (aka Health Insurance Allowances)
4. What is the best way for small businesses to understand their health insurance options?
The best way to compare the cost and benefits of different small business health insurance options is to work with a health insurance broker. Studies show that small businesses and individuals who purchase health insurance through a broker save money, and are happier with the benefits in the long term because they understand what they are purchasing.
Work with a broker to help evaluate the business's health insurance needs, by asking these three questions:
1. Should we offer health benefits, or not?
2. How much can the business afford to spend?
3. Which strategy is best for the small business and employees?
5. What are the benefits of offering small business health insurance to employees?
The benefits of offering health insurance to employees are generally agreed upon: employee recruiting and retention, employee productivity, morale (businesses want to show they care about employees), and help protecting employees/owners from catastrophic financial loss.
That being said, each small business has their own specific reason for investing in health insurance. Click here to read more about the benefits of offering small business health insurance.
What FAQs do you have, or receive, about small business health insurance? Leave a comment or question below.