Do I Have To Provide My Employees With Health Insurance if I Am Self-Employed?

Health insurance can be a confusing topic, especially when you are self-employed. If you are self-employed and considering hiring employees, it can become even more confusing. As a business owner, you have to follow the guidelines of the Affordable Care Act in regards to health insurance, but do you really need to provide your employees with coverage? If you are self-employed and hiring employees, here is what you need to know about coverage under the Affordable Care Act.

Requirements for Providing Coverage

Simply put, under the Affordable Care Act, you do not need to offer health insurance benefits unless you are hiring at least 50 full-time employees. Businesses with fewer than 50 employees, whatever their formation, do not have to offer health insurance.

However, just because you don’t have to offer insurance doesn’t mean your employees will be left out in the cold. There may be Small Business Health Options Program plans available in your area. If there are such plans available to you, you may be able to obtain a small business tax credit so you can offer coverage to your employees at an affordable price.

If you have fewer than 25 employees, you may be able to obtain a tax credit for up to two years if you purchase a plan through the SHOP exchange. You will need to pay a minimum of 50% of your employees’ premiums, and your employees need to have an average income of less than $50,000.

Purchasing Coverage Through a Broker

If you don’t like the idea of purchasing a plan through the SHOP exchange, you still have other options available. You do have the option of purchasing a
small group plan directly from the health insurance company with the help of an employee benefits broker in Santa Rosa. Employee benefits brokers have in-depth knowledge of the insurance-buying process and are able to answer any questions you may have about health insurance. In short, a broker can simplify the buying process and make finding the right type of coverage for your employees easier.

A health insurance broker is a licensed professional who is capable of helping businesses and individuals manage their health insurance coverage. Researching and buying health insurance for a large number of people on your own can be difficult and exhausting, and many people find themselves quickly overwhelmed by the prospect. Professional health insurance brokers can help you understand your options and sift through them in an efficient manner. They can also help you find a plan that meets your employees’ needs while fitting into your budget.

QSEHRAs and ICHRAs

As an employer, you can also encourage your employees to find health insurance on their own. You could still help out with the cost by offering a QSEHRA or ICHRA, both of which allow you to cover some of your employees’ costs by reimbursing them on a pre-tax basis.

A qualified small employer health reimbursement arrangement allows employers who do not offer health insurance coverage to their employees to reimburse them tax-free for their premiums. This applies to any coverage an employee may have, whether it was purchased on or off the exchange. In 2019, the maximum amount employers could reimburse their employees for was $5,150 for an individual and $10,450 for a family.

An individual coverage health reimbursement arrangement is a relatively new form of reimbursement that became available in 2020. ICHRAs allow any employers, regardless of size, to reimburse their employees for the health insurance they purchase on their own. Employers may reimburse employees for some or all of their payments, and many people like the fact that an ICHRA can provide additional flexibility in regards to the amount employers can reimburse an employee.

An ICHRA can offer numerous benefits, including the following:

Large employers can utilize an ICHRA to comply with the employer mandate, as long as the benefit is enough to make health insurance coverage affordable.Employees with grandmothered and grandfathered plans may take advantage of an ICHRA.There are no limits on how much an employer can reimburse an employee.Employers can offer both a health plan and an ICHRA.ICHRA-eligible employees are also eligible for a special enrollment period. This provides additional flexibility and convenience.

These are not the only benefits of an ICHRA, but they are some of the most important. With an ICHRA you can ensure your employees have the affordable coverage they need without breaking the bank.

Learn More

As a self-employed worker considering hiring employees, you have numerous options at your disposal in regards to health insurance coverage. If you don’t want to offer coverage, there are still many ways to financially support your hardworking employees. If you choose to offer health insurance coverage, there are ways to make it affordable. Reach out to Sackett & Associates Insurance Services today to learn more about health insurance for your employees.