3 Facts Small Business Owners Need to Know About Health Care Benefits
Group health care benefits have always been a great tool for business owners to recruit and retain employees. However, our experience has shown that many small business owners do not know what they are required under the Affordable Care Act to do with health care benefits for their employees. Is group health insurance truly a feasible option for employers? Is there a better option out there?
Here are three facts all small business owners need to know about group health care benefits:
1. You do not have to offer group health insurance.
A little unknown fact about the Affordable Care Act’s “Employer Mandate” is that businesses with less than 50 full-time employees are not required to provide health insurance as a benefit to employees. Small businesses will not be fined a penalty if they do not offer health care benefits, as opposed to large group (50+ employees) businesses that will be fined a penalty for not doing so.
2. Your employees will pay a fine for not having health insurance.
However, beginning this past January 2014, the Affordable Care Act implemented that all Americans are required to have health insurance, or face being penalized. If you choose to not offer health insurance to your employees, your employees are still responsible for obtaining health insurance on their own. This includes you, the employer. Health insurance outside of group health insurance is referred to as “individual health insurance.”
3. Individual health insurance is better for your employees.
There are many advantages for choosing to not offer group health care benefits to your employees, and allowing them to purchase individual health insurance.
Advantages for your employees include:
• All pre-existing conditions are covered. What used to be only possible in the group market, is now available in the individual market. Your employees cannot be denied coverage because of medical conditions thanks to the Affordable Care Act.
• Individual health insurance can be discounted. Depending on your employees income and household size, they could receive a subsidy from the government to help them pay for their health insurance. In many cases, individual health insurance costs less than group health insurance.
• Your employees can choose their preferred network and specify which deductible, co-pays, and co-insurances they would like.
Advantage for you, as the employer, include:
• It saves you money. Lots of money.
There have been recent studies that show that group health plan premiums are skyrocketing, by 588% in some states. The reason being is that the Affordable Care Act has attached large excise taxes to group health insurance plans to help cover commercial underwriting restrictions and to ease the restriction on the insurance carriers because they are not allowed to vary premiums between young and old insureds based on the actual costs of providing the coverage. All of these have substantially raised the price of the premiums.
So what should you do? We say, drop your group insurance, or if you are thinking about offering group insurance, don’t. Allow your employees to buy a individual health insurance product that allows them the freedom to choose which network they would like, what deductibles/ co-pays / co-insurances they like, and also they will get help paying there premiums via governmental subsidies if they qualify.
If you still want to offer a benefit to your employees, offer a benefit such as dental and vision insurance, life insurance, or long term disability insurance. Your options are unlimited, especially since you will be saving some serious $$.
Lastly, let us help you. Health insurance can be confusing, and we happen to know it like the back of our hands. We have a defined strategy on how to switch group health insurance to individual health insurance. We happen to be quite good at it. Contact us today. We can go through detail by detail on how this is the right strategy for you, even offer you some quotes to prove it.