small business health insurance

Small Businesses and Health Insurance: What is the best option for you and your employees?

Many small businesses are torn between providing employees with health insurance or not.

Why? There could be financial restrictions regarding group versus individual coverage plans. If money is tight, there are ways to provide health insurance for your employees, but sometimes, group insurance plans may not be best for you.

What that means is…

Some small businesses find it to be much cheaper to offer a group health insurance plan through the Small Business Health Options Program (SHOP). In some cases, it is, because businesses can receive tax credits if they obtain health insurance through that program. However, if your small business does not qualify for SHOP, you may be forced to ask your employees to sign up for individual plans.

Is one cheaper than the other?

The cost of a group insurance plan is $6,000 a year for a single person and $16,000 a year for someone with dependents while an individual insurance plan costs $984 a year, including subsidies. Even though employees may be satisfied with the lower cost of insurance through individual coverage, small business owners can face more charges: having to pay the Employer Shared Responsibility Payment of $2,000 per employee under Obamacare. On average, it seems like opting for individual health insurance is less expensive, but within SHOP, there are many ways to lower the prices of health insurance as a small business while still reaping the extra rewards it offers.

What is SHOP and how can I use it to my advantage?

SHOP is a program offered under the Affordable Care Act (ACA) that allows small business owners to offer high quality health insurance to their employees for a lower price.

Through this program, you are offered maximum flexibility and are able to be involved in the decisions regarding price:

  • You are able to pick and choose which plans you can offer (ex. include dental or not)
  • You can decide if you plan to extend insurance to your employees’ dependents
  • You and your employees are able to participate in a company wellness program to encourage an incentive to lead a healthy lifestyle and promote better self-care (which can mean fewer trips to the doctor’s office and lower insurance costs!)
  • If you have less than 25 full-time equivalent (FTE) employees, you qualify for a tax credit worth up to 50% of your plan’s cost (bonus!!)

But what is the best option for you and your small business?

Ultimately, it is up to you whether or not you’d rather enroll in SHOP and work for a lower price or let your employees sort out the finances (even though you possibly may have to pay a penalty for it).

First, figure out whether or not you are eligible for the Small Business Options Program (SHOP) with the FTE Calculator. Then, review which option is more worth it to you and your small business.