Group Health Insurance: Is It Mandatory?
Many small businesses are confused about whether or not they are required to provide mandatory group health insurance for employees. Under the Affordable Care Act, new health coverage requirements have been made that may affect small business owners.
How the Affordable Care Act changed insurance coverage for small business owners
Generally speaking, ACA does not require most small business owners to offer group health insurance coverage. If the organization has fewer than 50 full-time employees, small business owners are not subject to a penalty for not providing health insurance for their employees. Many small employers opt to provide coverage anyway, in order to help them hire and retain the best workers.
As of 2016, if the organization has 50 or more full-time employees, it is required by law to provide health insurance to all employees or be subject to a penalty.
Special rules and requirements may apply when employers offer coverage:
- Any plan offered by an employer must meet benefit and coverage standards defined by the Affordable Care Act.
- Any plans offered by the organization should meet the standards of affordability set forth in the guidelines of the ACA.
- Eligible employees must be offered health insurance within the first 90 days of their employment.
Employers under this umbrella are also subject to the Employer Shared Responsibility Payment if the coverage they offer is not affordable for their employees, or it does not meet the minimum standards.
Should small business provide health insurance coverage for employees?
There may be a number of advantages to offering health insurance coverage to your employees:
- Hiring and retaining talent. You know how important health insurance and access to medical care is to you and your employees. By offering group health insurance coverage, you may be better able to hire and retain the workers you want.
- Multiple ways to buy. You may be able to purchase an employer-based group health insurance plan through special government-run marketplaces, direct from the insurance company, or through private licensed online marketplaces.
- Help from licensed agents. When you shop with a licensed agent, your agent can often help you manage employee enrollment and also serve as your main point of contact with the insurance company.
- Possible tax credits. When they purchase coverage through government marketplaces, some small businesses with 25 or fewer employees with average annual wages of less than $50,000 may be eligible for a special tax credit of up to 50% of the employer contribution toward employee health premiums.
- Preventive care coverage. Under all Obamacare-compliant plans, certain preventive care services are covered without deductible, co-payment or coinsurance.
- Coverage for pre-existing conditions. Under the ACA, any health insurance coverage offered under the SHOP Marketplace includes coverage for pre-existing conditions.
If your small business is required to provide health insurance under the ACA, don’t leave your company at risk for potential penalty. Even if you’re not required to provide coverage, offering health insurance to your employees may be a good idea. Contact your health insurance representative to see how you can provide your employees with health insurance coverage today.