Small businesses may qualify for tax credits that make it more affordable to provide health insurance to their employees. They also have some unique rights and responsibilities. Learn more here.
- What is considered a small business?
- Can I get tax credits for providing insurance to my employees?
- Do I have to provide health insurance to my employees?
- What should the health insurance I offer to my employees cover?
- What should I know when I am looking for health insurance options for my employees?
- What health insurance alternatives are available to my employees through the new law?
- Do I have to pay more based on the health status of my group?
- Can an insurer cancel my small employer plan because one of my employees gets sick?
- Do I have to report the cost of insurance in my employees’ W-2 forms?
In general, you are considered a small business if you have up to 50 employees. In some states, this will include you if you are self-employed with no employees. Contact your State Department of Insurance to find out whether this applies in your state.
If you have up to 25 employees, pay average annual wages below $50,000, and provide health insurance, you may qualify for a small business tax credit of up to 35% (up to 25% for non-profits) to offset the cost of your insurance. This will bring down the cost of providing insurance.
Starting in 2014, the small business tax credit goes up to 50% (up to 35% for non-profits) for qualifying businesses. This makes the cost of providing insurance even lower.
The Affordable Care Act does not require employers to provide health insurance for their employees.
The Employer Responsibility provision of the Affordable Care Act applies businesses with more than 50 full-time workers. To learn more read the Employer Bulletin on Automatic Enrollment, Employer Responsibility, and Waiting Periods.
It depends--states vary on what they require insurers to cover in small employer plans. Contact your State Department of Insurance for more information about small employer coverage requirements in your state.
If you are a small employer with 2-50 employees, health insurance companies cannot turn your business down based on the health status of your employees or their family members. This rule applies when you initially apply for small employer coverage and if you decide to change plans.
An insurer must also accept everyone in your group. Employees or family members (if you offer dependent coverage) with health conditions cannot be excluded from coverage.
Health insurance companies must sell you any small employer health plan they sell to other small employers in your state.
Contact your State Department of Insurance to learn more about your rights to getting and keeping small employer coverage.
Starting in 2014, small businesses with generally fewer than 100 employees can shop in an Affordable Insurance Exchange—a new, transparent, competitive marketplace where individuals and small businesses can buy affordable, qualified health benefit plans. This gives small businesses power similar to what large businesses have to get better choices and lower prices for employee coverage.
Exchanges will offer more choices of high-quality coverage and lower prices. Exchanges will offer a choice of plans that meet certain benefits and cost standards.
- Small businesses will benefit from insurance with lower administrative costs compared to the choices available in the small business market today because they will be able to pool together.
- Limits on insurance rating, such as no more rating based on employees’ health status or gender, will lower premiums for many small businesses.
- The small business tax credits and the new competition promoted by Affordable Insurance Exchanges will help keep the cost of insurance down.
Most states, but not all, limit how much premiums can vary due to employees’ health status and other factors. Even within these limits, premiums can be significantly higher if someone in a small employer plan has a serious health condition.
Contact your State Department of Insurance for more information about small employer rating rules in your state.
Under the Affordable Care Act, this will change. Starting in 2014, insurers won’t be allowed to charge more based on the health status of your group or the gender of your employees. There will also be limits on how much premiums can vary based on age.
No, your insurance for the group (or for any member of the group) cannot be canceled because someone in your group becomes sick. This is called “guaranteed renewal.”
Employers do not have to report the cost of insurance on employee W-2s in 2011. This reporting is optional in 2011.
The reporting requirement is intended to be informational and provide employees with greater transparency into health care costs. The amounts reported are not taxable.