Top Questions About Health Insurance Small Business Owners Ask

Let’s start with the basic question on many employers’ minds … Do employers have to offer health insurance? 

If you have 50 or more full-time equivalent employees (FTEs), you may be subject to IRS penalties if you don’t offer affordable care. 

If you have fewer than 50 FTEs, health insurance isn’t required. But there are several benefits of offering insurance anyway, including improved employee recruitment and retention, small business tax credits, and better morale. 

According to KFF, employers spend an average of $7,584 (single) and $19,276 (family) per year, per employee. 

But if you’re wondering how much does health insurance cost, keep in mind that price tags vary widely depending on: 

* Your health insurance carrier (e.g., Cigna vs. Aetna)
* Plan type (e.g., PPO vs. HDHP)
* Location
* Single vs. family coverage

There are several group health insurance plans, including high-deductible health plans (HDHPs) and preferred provider organization (PPO) plans. 

If you’re not required to provide a group plan and want to look for an alternative, you might consider a QSEHRA (Qualified Small Employer Health Reimbursement Arrangement). 

Independent contractors, freelancers, gig workers, and part-time employees likely don’t have access to employer-sponsored coverage. 

You can use HealthCare.gov to obtain individual health plans. There are online insurance marketplaces, like Stride, that are official HealthCare.gov partners. These partners offer the same plans and prices, plus provide personalized support to find the best insurance plan. 

You can learn more on Stride’s website. 

Yes, an LLC can typically get group health insurance. LLCs with employees can sign up for group health insurance plans. 

However, most insurance providers require that you have at least one W-2 employee to sign up for group coverage. Generally, single-member LLCs must obtain individual health plans, but you may be able to purchase a “group of one” plan in some states. 

Yes, you can claim your employer share of health insurance premiums as business expenses if you provide health benefits to employees. 

Businesses that have 50 or fewer full-time equivalent employees and enroll in a SHOP plan may be eligible for the Small Business Health Care Tax Credit. The credit is worth up to 50% of a qualifying business’s premium costs. 

Employers and employees typically split the premium in a group health plan. So, who pays what amount?

Generally, employers pay the majority of each employee’s premium. Employees pay the remaining amount that you don’t cover in the form of a payroll deduction. You remit the total monthly premium (employer and employee shares) to the insurance company.  

Most insurance companies require that you cover at least half of each employee’s premium. And, the Affordable Care Act (ACA) requires that businesses with 50 or more employees offer “affordable” coverage by ensuring the employee’s portion is lower than a designated percentage of their household income. 

Employers typically cover 78% – 80% of the total health insurance premium to stay above the ACA and insurance companies’ requirements. 

Some payroll software providers integrate directly with health benefits. 

Through a health benefits integration, you can shop for health insurance plans, manage benefits, and automatically sync benefit deductions through payroll. 

Patriot Payroll® offers a health benefit integration through SimplyInsured, a health insurance marketplace and administration platform.  

You can set up your health insurance plan through the following avenues: 

* Health insurance marketplace
* Private insurance broker
* Carrier 
* SHOP Marketplace

Consider using the health insurance marketplace your payroll provider integrates with, if applicable. That way, you can streamline payroll and benefits administration.