Making Sense of Group Health Insurance – An Employer’s Guide

Posted in Group Health Insurance

As a business owner in Colorado, it’s in your best interest to maintain a healthy, productive workforce. Whether you have 5 or 500 employees, providing access to quality health insurance is a smart way to attract and retain the best talent. Nevertheless, buying group health insurance for your business is a little different than purchasing an individual policy for yourself or your family. Here’s what you need to know about group coverage.

Are You Required by Law to Offer Group Health Insurance to Your Employees?

The passage of the Affordable Care Act (ACA) ushered in significant changes to laws surrounding health insurance and employers. While laws are constantly being updated, the size and structure of your workforce determines what applies to you.

If you have 50 or more full time employees. Businesses with 50 or more full time employees (defined as working 30 or more hours per week) are required to offer health insurance, or may face a penalty. However, the penalty for not providing coverage is only triggered if at least one employee receives a premium subsidy on insurance purchased through the exchange.

In 2018, the penalty for not providing group health insurance with over 50 full time employees is $2,320 per full time employee. Interestingly, the first 30 employees are not counted. For example, if you have 100 full time employees, and do not offer insurance, the penalty is calculated as 70 x 2,320 for a fee of $162,400. Remember, the penalty is only triggered when at least one employee receives a premium subsidy through the exchange.

If you have less than 50 full time employees. As a small business owner with less than 50 employees, you are not required by law to offer group health insurance and will not face a penalty for not providing coverage. However, if you decide to make health insurance available to your employees, coverage must be compliant with ACA requirements for small group plans.

According to the Affordable Care Act, small group health insurance plans are available to all businesses with fewer than 50 employees, and large group health insurance plans are available to business with 50 or more employees. However, in California, Colorado, Vermont and New York, “small business” was extended to include businesses with 50-100 employees, allowing them to purchase coverage in the small group market.

Who Is Eligible?

The law requires that all businesses in Colorado with at least 2 full time employees are eligible for group health insurance, regardless of the health status of employees. Business owners are counted as employees, meaning even companies comprised of a single owner and one employee are eligible for group benefits.

In general, if coverage is offered to one full time employee, then coverage must be made available to all full time employees. The same applies for part time help. Spouses and dependent children through age 26 of employees are also eligible for coverage under a group plan.

Tax Credits for Small Business 

The Affordable Care Act provides tax benefits to small businesses in Colorado with less than 25 full time employees who choose to purchase group health insurance.

The small business health care tax credit benefits employees who meet the following criteria:

  1. Employee less than 25 full time employees.
  2. Pay average wages of less than $50,000 per year per full time employee.
  3. Offer a qualified health plan obtained through the Small Business Health Options Program (SHOP) Marketplace to employees.
  4. Pay at least 50 percent of the cost of employee only (not dependent) health care coverage for each employee.

Employers are not required to pay the full premium for employee coverage; most pay a partial amount, using tax credits to offset the costs.  

A Word on the Individual Mandate Repeal 

Effective in 2019, the individual mandate clause of the ACA will be terminated. However, the bill does not impact the employer mandate. Businesses with 50 or more full time employees are still required to offer affordable, comprehensive health insurance to full time workers or face a penalty.

Navigating group health insurance can be tricky. If you would like to learn more about possible tax credits, or need help finding the right group insurance for your business, give us a call. We’re here to help.

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