Group Health InsuranceGet your group quote now by filling out this Group Census Form and faxing to (435) 200-9150
What Is Group Health Insurance?
Is Insurance Required by Law?
Who Is Eligible for Coverage?
Who pays for Group Health Insurance?
These are common questions asked by new and existing small business groups. Buying insurance for your small business (group coverage) has different rules than buying just for yourself or your family (individual coverage). Below, we outline the basics behind group coverage.
What Is Group Health Insurance?
Group Health Insurance refers to a policy issued to an employer group (or a similar group of people) that covers all eligible employees in that group. It most often will also insure their dependents, but it is not required by law. The policy is issued to the group as opposed to an individual health insurance plan that is issued to an individual.
Rules Governing Group Health Insurance
The rules are quite different for group coverage versus individual health insurance. The main difference is the way the risk is calculated. With individual coverage, the insurance company now has to comply with all of the Affordable Care Act rules as of March 2010. This means that an individual plan has to include the 7 essential benefits that must be covered and an individual cannot be denied based on their health. In fact, individuals do not even disclose any medical conditions anymore due to the ACA (Affordable Care Act). Small Group plans are similiar to individual plans except the employer group provides the coverage options and pays at least 50% of the employee only rate. Some companies offer dependent coverage, while others do not. Some companies pay for 100% of the employee and nothing for dependents. Others pay for 100% of employee, spouse & dependents. By law the employer is only required to pay 50% of the employee only rate. any coverage above that is optional to the employer. The employee would then assume all costs above what is offered by his/her company. With groups such as small businesses, the insurer determines a premium price based on risk factors balanced over the entire group, using general information on members of the group, such as age or gender. Insurers are required by law to offer coverage to small groups.
Is Insurance Required by law?
While there is no law requiring small business owners to provide health insurance, the Affordable Care Act makes substantial changes that small business owners should be aware of when deciding whether to purchase insurance for their employees. If you do choose to offer coverage, there are regulations you will have to follow—the most important of which we explain on this site. Though large companies may face penalties if they do not offer coverage under the Affordable Care Act, small businesses with fewer than 50 full-time-equivalent employees will not be penalized if they do not provide coverage. If you have at least 50 full-time-equivalent employees but none receive an individual premium tax credit or cost-sharing reductions (both based on income), there’s no penalty—whether or not you offer health insurance.
What Is the Small Business Health Care Tax Credit?
Since 2010, tax credits have been available to qualifying small businesses who offer a group health insurance plan. In 2014, the tax credit is worth up to 50% of your contribution toward employees' eligible premium costs (up to 35% for tax-exempt employers). The tax credit is highest for small businesses with fewer than ten employees who are paid an average of $25,000 or less. The smaller the business, the bigger the credit.
To be eligible for the small business health care tax credit you must:
1) Employ fewer than 25 full-time equivalent (FTE) employees, and
2) Pay an average wage of less than $50,000 a year per employee, and
3) Pay at least half (50%) of employee health insurance premiums (for full-time employees only), and
4) Purchase the health insurance plan through your state’s Small Business Health Options Program (SHOP) Marketplace; unless there are no SHOP plans offered in your region.
The credit is available to eligible employers for two consecutive tax years. To learn more about what the Affordable Care Act requires of small business and to find out how penalties are calculated see “Shared Responsibility Requirement.” The small business healthcare tax credits have been available since the 2010 tax year, with significant changes implemented in 2014. To qualify for a tax credit of up to 50% of premium expenses for any two years, small business owners must pay at least half of employees’ healthcare premiums and have fewer than 25 full-time-equivalent employees who earn an average of $50,000 or less per year.
What Is the SHOP Marketplace?
As part of the ACA’s Health Insurance Marketplaces, there is an option for small businesses called the SHOP Marketplace. This is a new way for small businesses with fewer than 50 employees (or fewer than 100 in some states) to purchase a traditional group health insurance plan. As mentioned previously, if you want to access the small business tax credits you must purchase a SHOP plan (unless there are no SHOP plans available in your region). However, if your small business hasn't been able to afford or qualify for group health insurance in the past, the SHOP doesn't offer much to change this.
Utah's SHOP Marketplace has shut down as of January 2018
See here for details on the shut down of Avenue H, Utah's Group SHOP health plan market. As of January 2018, Utah's Avenue H is no longer accepting applications. This means that Instead of using HealthCare.gov to choose a plan and enroll, you’ll work with an insurance company or with a SHOP-registered agent or broker. You’ll work with your agent, broker or insurance company to pay your premiums, and you won’t make payments through HealthCare.gov.
Is Your Business Eligible for Group Coverage?
Under federal law, small employers are guaranteed group coverage should they choose to purchase it, regardless of the employees’ health status. A “small employer” is defined as a business with 2 to 50 full-time employees. Owners are generally counted as employees, so sole proprietorships with one employee usually fall into this category, as do partnerships without any employees (by definition partnerships have two or more partners). Some states define the self-employed as “groups of one” and require insurers to guarantee issue them coverage in the small group market.
What employees are Is Eligible for Coverage?
The general rule is that if an employer offers group health coverage to any full-time employees, the employer must offer coverage to all full-time employees. The employer has the option to offer coverage to part-time employees (defined as those working fewer than 30 hours per week). If the employer offers coverage to any part-time employees, all of them must be offered coverage. These rules apply regardless of the medical condition of the employees. In other words, any eligible employee can’t be denied coverage based on previous medical problems, known as preexisting conditions. In addition, any dependents of eligible employees are generally eligible for coverage under a group plan. Dependents include spouses, children, and in some cases, unmarried domestic partners. Dependents cannot enroll for coverage unless the employee has enrolled. Under the Affordable Care Act, group insurance plans are required to extend coverage to adult dependents through age 26.
How much Do Employers Have to Pay?
Some employers who decide to offer coverage choose to pay the full premium, while others require employees to pay a portion. When considering what portion of the premium to pay, employers should be aware that the Affordable Care Act offers small businesses tax credits to help offset the cost of insurance.
Can an Employee Choose an ACA Individual Plan insead?
Yes... but with a catch. It is important to note that if an employee opts out of their employer group plan, in most cases they are forfeiting any subsidy that normally makes the individual ACA (Affordable Care Act) plans "affordable." For example, if a family has not employer group option they might get a $800 / month subsidy on their $1,000 / month health plan. This means they would only pay the $200 / month. But that same family would forfeit the $800 subsidy if they were offered a group employer plan and chose to ignore it and purchase an ACA health plan. In some cases it is actually worse for the employee to have a group plan offered to them! Because there is no requirement to make the dependent coverage "affordable", only the employee's rate is considered when using the 9.5% of the employee's wages to determine affordability. For example, if an employee makes $60,000 per year, their group health plan is considered "affordable" as long as the employee only option is less than 9.56% of the employee's annual salary. This means that as long as the annual cost for coverage is less than $5,736/ year, it is "affordable". That is aproximately $478 / month in this example. But if the employee has a wife and 3 kids, that coverage may cost him/her an extra $800 / month or more to cover the family! This makes it tricky for the employee to cover their spouse and children, because dependent coverage is not considered when calculating the 9.56% "affordability" rule. The family would be paying over $1,200 / month in some cases which is actually 40% of their income! If the family were not offered health coverage through an employer, they would have been able to qualify for just under $700 / month in subsidy. This would allow them to get a High Deductible Health Plan for around $50 / month, or a Silver Plan with an $1,800 deductible for apx $425 / month. Having a group employer option in this case makes it WORSE for this family.
Can Employers help with this situation?
Yes. Employers can decide to have health plans that cover the employee only and not cover dependents. In that case, the family dependents are not offered a group health plan, and would be free to go to the Health Insurance Marketplace to get a group health option and would be legally able to get a subsidy. Having said that, some groups feel it necessary to offer coverage to be competitive. They don't realize that they are actually hurting some families by doing so!
The Next Step: Talk with a broker or agent to find out about all your options on premium cost
As an employer, the ability to offer a group sponsored health insurance plan can help in the recruiting and retention of your best talent. Providing a competitive health insurance option also allows your employees to pay for medical bills and provide safety and security for themselves and their families.
Using our services allow you the following:
Convenience: We are a "One stop shop" for Medical, Dental and Health Savings Accounts. You are then billed monthly for all of the plans your employees choose.
Employee Choice: You will be able to offer every health insurance plan available in the State of Utah and beyond.
Simplified: Employees can compare a variety of health plan benefits, premiums and network side by side.
Controllable Cost: You as the employer get to decide how much you can afford to contribute. The plans allow you to use a flexible defined contribution approach. There are no additional fees to participate; the plans and premiums are the same as buying direct from the insurer.
Open Year Round: You can register your business any time
throughout the year.
Call Greg Davies at (435) 767-1415 to set up a consultation for your business