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How to Offer Health Insurance as a Small Business Owner

health insurance for small business

When it comes to running your own business – the sky is the limit. You’re in charge of your hours, the size of your business, how much you bring in as profit and whether or not you bring on employees. But even though the list of perks is long, there are parts to running your own small business that seem difficult , time consuming, and complex. Offering health insurance to your employees or even making sure you have your own health insurance because you self-employed can seem daunting. Even though it takes some time to complete, offering health insurance as a small business owner brings benefits in many ways and is well worth the effort.

Do You Need to Provide Health Insurance as a Small Business Owner?

When it comes right down to it, offering health insurance to your employees is required by law if the size of your company meets the laws specifications. At the point of this writing, whether you feel like you’re a big company or not, you are required to provide health insurance to your employees if you have 50 or more full-time employees or the equivalent. You can search for a company to provide health insurance for your small business on your own or work with a broker. Using a broker can save you time and they can help you complete the paperwork required and provide you with all the ins and outs of the plans you’re considering. however, brokers earn their living by making a commission and you’ll be footing that bill – it’s well worth it if you’re looking to make the process as easy and painless as possible but worth considering going it alone if you’re working on a budget.

Finding insurance for your business will take some money in addition to time and effort but there are benefits that come by offering health insurance to your employees.

What You’ll Need to Apply for Health Insurance Coverage Plans

Apply for a health insurance plan for your small business is similar to applying for a business loan -the company requires documents and paperwork to complete the process. Gathering these items up in advance will make the application process easier, so here’s what we suggest you gather to get started:

  • employer name
  • business address (needs to be a physical street address, not a PO Box)
  • list of employees to be covered (if you’re covering one full-time employee, you’re required to cover them all)
  • Tax ID or Employer Identification Number (EIN)
  • Business start date
  • Payroll records (this will prove that you pay out salaries over $50,000 as stated in the law and also will help come tax time)
  • Industry Code (SIC)

You’ll also want to pull together information on your employees because you’re looking for group coverage. The health insurance company uses this information to decide on premiums and other costs to match your employee risk levels. Information to include here are:

  • names
  • ages
  • number of dependents
  • zip codes

How to Figure Out How Much Coverage You Need

Once you’ve decided if you need to legally offer health insurance, whether or not to use a broker, and have gathered up the necessary documents and information, you’ll also want to spend a few minutes looking at your financials to be sure you know how much you can spend. Now is a great time to check in with your accountant or bookkeeper if you’re not sure how much money you’ve got available for this. If you’re going it alone, you’ll need to consider the number of employees you have, how much you pay them, and how much you can afford to pay per employee each month for health insurance. The answer varies based on company but if you’ve got more questions, we’re more than happy to answer them.

How Offering Health Insurance Coverage Benefits You as a Small Business Owner

We’ve given you the details of why and how and now it’s time to let you know how offering health insurance as a small business owner can bring you big benefits. Here’s our list:

  • you can qualify for a tax credit(up to 50% of your contributions based on the specifics of your business) – to do so you need:
    • fewer than 25 full-time employees or the equivalent based on working hours ( this is where paying attention to those that work part-time comes into play
    • pay salaries of less than $50,000 per full-time employee, on average, each year
    • front at least 50% of the premium cost of the small business health insurance
  • you can write-off health insurance premiums you pay as tax deductions – saving even more money
  • with a little bit more paperwork, you can set up your small business health insurance so that your employee can pay their portions of the premium with pre-tax money – that means they save cash and are more satisfied making it a win-win!
  • employees that have health insurance are more likely to go to the doctor when they’re sick and get yearly checkups – they’re healthier and that means less sick days and more productive employees

Now it’s time to start shopping for health insurance plans!

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