U.S. workers not only need health insurance, they expect it. Small business owners aren’t required to provide coverage, but should they and can they afford it?
Under the Affordable Care Act, companies with 50 or more full-time employees or the equivalent in part-time employees. To provide health insurance to employees and their dependents or pay a fine, $3,860 per employee in 2020. In the first quarter of 2016, 83.1% of American workers were offered insurance.
Smaller businesses with fewer employees, however, are exempt. So should your small business provide insurance? That depends on several factors, like can you afford it and do your employees need it?
Businesses that hire mainly high school or college students who are covered under their parents’ insurance. You probably don’t need to induce them to work with health coverage. But if you have a small team of dedicated adults, they probably don’t just expect insurance, they need it.
According to a 2018 study by Luntz Global Partners for America’s Health Insurance Plans, 46 percent of U.S. adults said health coverage was the deciding factor in taking their current job, while 56 percent said it was key to deciding whether to stay in their job.
Small Business, Big Problems
Other things that are important to employees, according to the survey, are prescription drug coverage, preventive care, and emergency care.
But can you afford health insurance for your employees? One of the best options for small businesses, according to healthcare.gov, is SHOP insurance. Non-profits and businesses with fewer than 50 employees qualify. And they don’t have to wait for an open enrollment period to sign up. Employees can all join the same plan or they can each choose their own, according to their personal needs. Empty-nesters will have different needs than young adults looking to start a family and look for different benefits.
SHOP insurance also allows the business to contribute to their employees’ premiums and to decide whether to cover their dependents, plus it offers dental insurance.
If SHOP insurance isn’t available, businesses can contact a health insurance provider, scout them online or go through a health insurance agent or broker, who will compare plans and prices, then let you know your options.
So, bottom line, what’s it going to cost?
The Bottom Line
According to research by eHealth in 2018, it’s actually cheaper per person to have insurance through a small group than to have an individual insurance plan, the idea being that more people are paying into the risk pool so the average is less.
Here are the 2018 numbers from eHealth:
The average per-person premium for small group health insurance is $409 per month in 2018. While an individual plan totaled to compared to $440.
Small group health plans had an average deductible of $3,140 per year, compared to $4,578 for individual plans.
Small business owners will need to assess their employees and figure out premiums, deductibles, and co-pays. If their employees are relatively healthy, they’re going to want lower monthly premiums and higher deductibles and co-pays, since their employees don’t go to the doctor frequently. But if the employees go to the doctor often and need regular medication, they’re going to want higher premiums with lower deductibles and co-pays.
Health insurance coverage can be one of the most complex parts of a small business owner’s jobs, but there is a way to work through the maze and have healthier and happier employees.
Amanda Rogers is a freelance writer based in Fort Worth, Texas
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