At What Point Should A Business Start Offering Health Insurance Benefits?

Businesses come in all sizes and with varying numbers of employees. And the classification of “small” businesses and “large” businesses differ widely depending on the agency or purpose.

For example, one source relates that the Affordable Care Act (ACA) identifies small to mid-sized businesses as falling into one of three distinct categories: those businesses with less than 50 employees, those with 50-99 employees, and those with 100 or more.

According to recent statistics from the SBA, small businesses make up 99.9 percent of US businesses and employ 47.1 percent of US employees.

However, the Small Business Administration’s definition of “small businesses” is a bit complicated. For example, the SBA defines small business by firm revenue (ranging from $1 million to over $40 million) and by employment (from 100 to over 1,500 employees), according to the U.S. Census Bureau.

Why is all this important? Because small business employers often struggle with the question of when they should (or can afford to) start offering health insurance to their employees.

And size matters.

BUSINESS GROWTH, CALIFORNIA HEALTH INSURANCE, AND YOU

Out of the small businesses in the U.S. that have staff members, more than 5,000,000 of them only have between 1 and 19 employees.

As an employer, if your business has, say, just 10 employees, you may want to offer health insurance benefits for them even though your company is not required to do so by the ACA. But as a business with just 10 employees, can you realistically afford to start offering health insurance?

Keeping in mind that you will be required to cover at least 50 percent of your worker’s monthly premiums and that these can range from over $7,800 for individuals to more than $22,000 per month for family coverage, can you budget for that?

As a conscientious employer, you certainly want to provide your staff with the very best employee benefits that your company can offer. For example, in addition to health insurance, you will likely want to offer good dental insurance and vision insurance, as well.

You are likely counting on continued business growth that will ease the financial strain of funding your health insurance costs and obligations. And being able to attract quality employees and retain those you already have are key elements to maintaining that business growth. But the prospect of significant upfront costs may also be keeping you from deciding.

At J.C. Lewis, we can help make that decision easier for you.

A brief meeting with one of our licensed staff members will provide you with more than enough knowledge to make an informed decision and choose from the best two or three plans that meet your particular needs.

In fact, the easiest way to find the best California health insurance plans available for your company and employees is to submit a Group Health Plan Quote Proposal. There are no obligations for you, or your company and it only takes a few minutes to fill out the group detail information and submit the proposal request.

LARGE EMPLOYERS, BUSINESS GROWTH, AND CALIFORNIA HEALTH INSURANCE

In the lexicon of the Affordable Care Act, in addition to the categories of small businesses, there are also what are known as “applicable large employers.”

What is an applicable large employer?

According to the website for the Office of Personnel Management (OPM),

“An applicable large employer (ALE) is an employer with an average of at least 50 full-time employees. An applicable large employer may be a single entity or may consist of a group of related entities. If there is a group of related entities, these are referred to as ALE members.”

This is significant since, according to the stipulations of the IRS,

“If an employer has at least 50 full-time employees, including full-time equivalent employees, on average during the prior year, the employer is an ALE for the current calendar year, and is therefore subject to the employer shared responsibility provisions and the employer information reporting provisions.”

As an employer with 50 or more employees, you should be offering health insurance, but it is not required. However, there is a penalty assessed by the IRS of $2,570 per full-time employee minus the first 30 workers.

A simple scenario would be an employer with 50 employees who has chosen not to take on the expense of providing employee health insurance and opts to pay the penalties instead. So, for the 20 employees above the first 30, that employer could be looking at $51,400 in fines.

Most reasonable employers would agree that opting for employee health benefits would be a far more cost-effective and productive choice.

Want to know if your company qualifies as an ALE? The Society for Human Resource Management (SHRM) provides an in-depth resource and an Applicable Large Employer calculator (ALE).

JC LEWIS: WHEN YOU’RE READY TO OFFER YOUR EMPLOYEES HEALTH INSURANCE BENEFITS

At J.C. Lewis Insurance we want to be your insurance partner and we offer quality health insurance plans only from the leading health insurance carriers licensed to do business in the states that we operate in.

We are a family-owned and operated health insurance agency located in Sonoma County, California. As specialists in finding and managing medical insurance plans for large and small businesses, and we are licensed and certified by each insurance carrier we represent.

When you’re shopping for medical insurance for you and your employees you are likely to have several questions and concerns. That’s great because we welcome your questions about health coverage insurance and you can be confident that JC Lewis Insurance Services will help you find the right solution.