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What Small Business Owners Need to Know About Providing Health Care

Aug. 5, 2014
Small Business
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Many entrepreneurs are all too familiar with the seemingly endless list of tasks associated with owning a business. Making sure that you understand your health care options should feature prominently on that list, as providing health care is a great way to attract top-tier talent. Here are several health care-related questions worth mulling over as you look to expand your business.

1. Does my business qualify for SHOP tax credits?
The Small Business Health Options Program, or SHOP, can go a long way toward helping you provide affordable health care for your employees. The associated tax credits, in turn, can make a tremendous difference when it comes to financing that health care. Businesses with fewer than 25 full-time employees earning an average of $50,000 a year typically qualify for these tax credits. Although you’ll have to pay at least half of your full-time employees’ premium costs, you won’t have to provide coverage to part-time employees or dependents of full-time employees. To determine whether you qualify for these tax credits, consider using this SHOP tax credit estimator.

2. How can SHOP tax credits help my business?
In short, they will save you money. SHOP tax credits will cover up to 50% of your contribution toward employees’ premium costs. These tax credits are especially beneficial to companies with fewer than 10 employees who earn less than $25,000 a year. Let’s say you employ nine people, each with an annual salary of $25,000. If you contribute $70,000 to employee premiums, you’d qualify for $35,000 worth of tax credits.

3. Does the SHOP Marketplace offer multiple plans?
Yes, you’ll be able to choose from the Bronze, Silver, Gold, and Platinum plans. It’s worth noting that all four plans cover essential health benefits, like doctor visits and prescription drugs. However, the amount of money your employees will have to pay for things like deductibles and co-payments will be determined by the type of plan you buy. The total out-of-pocket amount an employee would have to pay per year if he or she requires a lot of care also differs from plan to plan.

4. I’m not sure which plan is best for my employees. Who can help me make an informed decision?
It may be a good idea to work with an insurance broker or agent, as he or she can guide you through the entire application process. This person would help you compare prices, as well as help you determine which plan would be best given your budget and business model. Best of all, you wouldn’t have to pay the broker or agent, as these fees are typically covered by the insurance companies whose policies are sold.

5. Great. So when does my business’ health care coverage kick in?
If you enroll in a health care plan by the 15th of the month, coverage will begin on the first day of the following month; otherwise, it will begin the month after that. For example, if you enroll by Aug. 15, your employees’ coverage would start on Sept. 1. If, on the other hand, you signed up for coverage on Aug. 16, your business’s insurance plan would kick in on Oct. 1.

6. When can I purchase a health care plan for my small business?
You can purchase a plan at any time. For a straightforward and painless guide to enrolling in health care, take a look at Health’s guide to getting started.

7. I’d like to hold off on getting health care for now. Will I be penalized for not offering health care for my employees?
No. Employers with 50 or fewer full-time employees won’t be hit with a penalty if they opt against offering heath care. However, providing health care for your employees is an attractive job perk, and might help you get the attention of potential talent.

8. I’d still like to get health care for myself. How does that work?
One straightforward way of securing health care is through the Affordable Care Act’s Marketplaces.Although the open enrollment period ended back in March, the next open enrollment period begins on Nov. 15, 2014, and runs until Feb. 15, 2015. Coverage would kick in on Jan. 1, 2015, even if you sign up on Nov. 15. However, if you’ve experienced a so-called “qualifying life event,” like marriage, divorce or the birth of a child, you may be eligible to enroll in health care immediately.


Doctor and business person image via Shutterstock.