Small business owners tend to wear a lot of hats. That includes insurance experts. The problem is, many business leaders who are in charge of evaluating benefits packages are in the dark about the myriad compliance requirements surrounding health insurance coverage. If your company plans to provide health insurance for employees, it’s important that you understand your choices and the laws around them.
5 Important Requirements to Know
- Small businesses with fewer than 50 full-time employees don’t have to provide health insurance under the ACA (Affordable Care Act).
- Companies with more than 50 full-time employees (or full-time equivalent employees) in the previously reported calendar year may be subject to the employer shared responsibility provisions of the ACA. This means that the employer must provide essential coverage to their employees (and families) or make a comparable payment to the IRS.
- Employers are required to provide employees with a summary of benefits and coverage explaining health plan coverage and costs.
- Coverage costs of an employer-sponsored group health insurance plan must be reported by employers on their employee’s W-2.
- Small businesses offering health insurance must offer it to all eligible employees when they become eligible for coverage, and that eligibility period should not extend beyond 90 days.
5 Health Insurance Options to Consider in 2023
If a small business is not directly offering employees a health care coverage plan, the business owner still has several alternative ways to assist employees with their health care needs.
- QSEHRA – A Qualified Small Employer Health Reimbursement Arrangement or QSEHRA (pronounced Q-Sara) is a benefits option that has been beneficial for the small businesses that are aware it even exists. Small business owners can put aside a set amount of money each month to be used for employee premiums and medical expenses. Employees are responsible for paying their own medical bills or insurance premiums, but the employer then reimburses the submitted expenses with those saved pre-tax dollars.
- ICHRA – An ICHRA or Individual Coverage Health Reimbursement Arrangement allows employers to provide a monthly tax-free allowance to their employees for individual health coverage expenses. This enables employees to shop for insurance outside of an employer’s group health plan or when an employer does not offer health insurance at all.
- Traditional Group Health Insurance – This is the standard group health coverage that everyone’s familiar with. Businesses either work with an insurance company directly or use an insurance broker to purchase group health plan coverage for all of their employees.
- Group Coverage HRA – Often known as a GCHRA, this is an employer-funded medical expense reimbursement plan. It allows a business to reimburse its employees tax-free for eligible out-of-pocket expenses and health insurance premiums. It’s most often paired with a high-deductible health plan (HDHP).
- Association Health Plan – This plan shows that there is strength in numbers. Several small businesses (those that are either in geographic proximity or in the same industry) can band together and gain the purchasing power needed to buy large group coverage.
Rule Changes for Larger Businesses in 2023
If your business employs fifty or more employees, you need to be aware of recent changes to health plan cost-sharing limits. Employer-sponsored health coverage must not exceed 9.12% of an employee’s income if it is to satisfy ACA affordability requirements for 2023. This is down from 9.61% in 2022. Make sure this change hasn’t pushed your plan into ‘unaffordable’ territory.
State Health Insurance Laws
When it comes to compliance when offering insurance, not only do businesses with 50 or more employees need to concern themselves with federal laws around health programs, they also have to be familiar with laws of the states they operate in.
Pro Tip: familiarize yourself with your state’s Department of Insurance to remain compliant.
Paycor Can Help
If your company decides it’s ready to provide health insurance for your employees, We can make the task much easier. Paycor’s Benefits Administration Software is the more efficient way to get all of your people on board so you can get back to focusing on your HR strategy.