For many small businesses, health insurance can seem intimidating, expensive and complicated. The idea of dipping into revenue for employee insurance can leave a bad taste in the mouth — like a spoonful of medicine, appropriately enough.
But offering health insurance doesn’t have to be difficult, said Kelsey Kappel, who leads new business development at Vista360health. Moreover, a good health plan can go a long way toward creating employee satisfaction and loyalty.
“Studies show that employees who are offered a health plan or health insurance have better work performance, less stress and more loyalty to the company that offered it,” Kappel said.
Either way, smart business get educated. That’s because, for companies of a certain size, there are fees associated with not offering a plan.
Kappel took some time to demystify employee health plans. That includes how to take advantage of benefits and tax credits — down to the forms you’ll need to file (you’re welcome). Read on for an expert’s take on making health plans manageable.
1. Take advantage of the small business tax credit
The small business tax credit can make the cost of health insurance more manageable. This credit reimburses employers up to 50 percent of the premium they pay for their employees.
To qualify, employers must have 25 or fewer full-time employees who average under $50,000 in wages. They must also be on a small group marketplace plan.
A tip from the pro: You might never even hear of this benefit if you rely solely on an agent or broker, as they may not be incentivized to help you get this tax credit. Now that you know about it, do independent research to determine if your company qualifies and then bring it to your broker, Kappel said.
2. Understand the “employer shared responsibility” provision
The employer shared responsibility provision was implemented with the Affordable Care Act and was designed to protect employees. The rule states that companies with more than 50 full-time employees must offer a qualified health plan and pay 50 percent of employees’ premiums or pay a fine. If they choose not do so, they will be fined about $2,300 per employee.
Most companies with 40 or 50 employees do offer a health plan. But for any company seeking an alternate path, it’s important to understand the repercussions, Kappel said. It’s up to you to weigh any potential pros against the many cons of not offering a plan.
Know this, too: When determining the number of full-time employees in your ranks, you’ll need to count more than just people who work 30 or more hours. The Department of Labor considers every 120 hours worked per month by part-time employees to count as one additional full-time employee, Kappel said.
3. Don’t leave tax breaks on the table
A number of tax incentives help employees and employers afford health insurance, Kappel said. Employers can establish a Section 125 Plan, for instance, which enables employees to set aside pre-tax dollars into a health savings account and to pay for health insurance premiums on a pre-tax basis. In return, employers save on social security and Medicare taxes.
Employers can also offer a Section 105 HRA Plan, in which they commit to paying a portion of an employee’s deductible. This allows employers to offer a health plan with a high deductible and keep premium costs low, while also supporting their employees.
“These plans can be a little confusing,” Kappel said. “It can be advantageous to have somebody walk you through the questions, and setting it up properly is important if you want to take these deductions.”
4. Make sure yours is a “qualified health plan”
The benefits and tax incentives listed above require that an employer offer a qualified health care plan. A qualified healthcare plan is one that’s compliant with the Affordable Care Act. It must offer essential health benefits like outpatient care, emergency services, hospitalization, maternity and mental health, among other services.
This is the government’s way of discouraging companies from offering catastrophic health plans in which premiums are low but deductibles are high, Kappel said.
Ready to choose a plan? Vista360health has been committed to the health of Central Texans for almost 25 years, helping small businesses find the best solutions for themselves and their employees.