Small Business Health Insurance
As a business owner or HR manager, small business health insurance is a daunting responsibility. To start a plan can be the toughest part, and once it’s up it can continue to be a challenge to manage. The reason for a health insurance broker is to have an advocate to ask questions you would never normally ask the insurance company. Here are a few of the top questions we get from clients who are looking into starting a plan and are unsure about small business health insurance requirements.
How many employees does it take?
Two – It takes at least two unrelated, W-2 employees. This can’t be a husband and wife. Owners who are not W-2 employees can enroll in the plan but additional documentation will be required depending on which insurance company you go with.
What about 1099 employees?
1099 contracted employees are generally not allowed on the plan. Some insurance companies allow them as long as they don’t make up more than 50% of the group. The main problem is if the 1099 employee isn’t paid that month someone still needs to pay the monthly premium to the insurance company.
How is health insurance paid for?
Under IRS Section 125, contributions made to small business health insurance plans are pre-tax. This isn’t just pre-income taxes, you also avoid all payroll taxes and the company doesn’t have to match this amount for Social Security and Medicare as well. Pre-taxing your health insurance is the single largest tax deduction you can take!
Who pays for it?
Every company is different. Some companies want their employees to contribute for most of the cost, so the company contributes the bare minimum. The minimum is 50% of the EMPLOYEE cost, 0% for dependents. This means if I could enroll for $300 or I could enroll everyone in my family for $700, the company would need to contribute a minimum of $150 (half of my cost, not myself and my family). Other companies decide to contribute more and make it easier for the employees to make the payments.
What choices are there for insurance companies and plans?
Small business health insurance plans offer the largest choice of doctors and hospitals. For example, when you purchase a plan from Anthem they have several different doctors lists they use. For individual plans, they use the smallest doctors list (Pathway or Pathway X HMO and PPO) but for small businesses, you’re offered their national network (Choice PPO). This goes for almost all small business health insurance companies.
Does everyone need to be on the same plan?
No – Most businesses offer between two and 3 different plans for their employees to choose from. There are also different ways to structure the payments so the employee shares the cost of “buying-up” or purchasing a more expensive plan. Many companies offer a “Base” HMO plan for younger, healthier employees and a buy-up PPO plan for individuals looking for better coverage.
Does everyone need to be with the same company?
Yes – We do need to put everyone with the same health insurance company. Most companies offer a wide selection of plans and a big enough doctors list to where this isn’t a problem. I’ve noticed that most employees tend to be more concerned about their doctor being on the list rather than a particular insurance company.
What if some employees don’t want it?
Most insurance companies allow us to waive 75% of the “eligible employees”. Eligible employees mean they’re not on a spouse’s coverage, VA, or other qualified coverage. For example, let’s say we have a group of 20, and 3 are enrolled in their spouse’s coverage, 2 are over 65 and on Medicare, 2 are on veterans plans and 3 are under 26 years old and covered under their parent’s plan. This would leave us with 10 remaining “eligible employees” Of these 10 most insurance companies only require 75%, (8/10) to sign up. Some insurance companies will go as low as 50%. So for these companies, only 5 of the total 20 employees have to sign up for the plan.
How much does a broker cost?
I’m a health insurance broker here in Reno and my services are no charge to you. I am paid from whichever insurance company you choose and it has no effect on your price. Going through me is the same price as going directly to the insurance company and purchasing the plan. I also shop with every insurance company that offers plans in Nevada. I don’t work for the insurance company, I work for my clients.
Where can I get a quote?
Turnaround time is less than 24 hours. All information is kept private and not shared with anyone outside our office. In addition, you can find a free quote by entering your company information here:
