Group Insurance for Small Businesses
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Oregon’s small employers account for more than 50% of the private sector jobs in Oregon.
Group Insurance: What do you need to know?
Group Insurance is also known as Employer-sponsored group health insurance. It covers a group of members, usually composed of employees or members of an organization. This Healthcare coverage is for members and can extend to their families and dependents. Group health members usually receive insurance at a lower cost. That is because the insurer’s risk is spread across a group of policyholders. The policy owner in this type of insurance is the employer, company, or organization.
How does Group Insurance work?
Group Insurance plans are acquired by companies and organizations and then offered to their employees. This coverage can only be purchased by a group and is not available to individuals to buy. These Plans need at least 70% of group members or employees to be “valid”.
Group Insurance is one of the most affordable types of coverage since the risk is spread among insured members of the group and offers lower premium costs, compared to a traditional individual health plan.
Advantages of Group Insurance
- -Risk is spread across a number of insured individuals
- Lower Premiums
- Insurers can manage risk better
- Insurers have control over costs through HMOs (Health Maintenance Organizations), in which the provider contracts with insurers to provide the group/organization’s coverage.
- Plans may also provide supplemental coverage (dental, vision, and pharmacy) in bubbles or separately.
Beginning in 2015, businesses with the equivalent of 50 or more full-time employees must provide “affordable” health insurance or pay a tax penalty. Whether you offer group insurance to employees or not, it is absolutely critical that you make your employees aware of their obligation to seek health coverage under the Affordable Care Act. And, you also have to inform your employees they have access to guaranteed coverage in the individual market, and that they may be eligible for government subsidies if the coverage you provide them is not deemed to be affordable under the law.
Keep in mind: Whether you buy a health plan directly from the insurance company or through a licensed agent does not affect your health premium cost since all prices are fixed. However, a licensed agency like Health Plans in Oregon represents multiple insurance companies, therefore, you can compare multiple health insurance plans that best fit your business’ needs and budget.
How much does health insurance cost for a small business?
Your small business has to cover at least 50% of the cost of health insurance for your employees (individual coverage). A nationwide average health care premium suggests that the cost per employee is $6,163 a year. As the employer, that means you’ll have to cover $3,100 a year, per employee.
Group Health Insurance cost depends on:
- Location of business
- Ages of employees under the group plan.
- Your preferred out-of-pocket costs. If you want to spend less in monthly premiums, you can select a plan with higher deductibles and out-of-pocket costs
Your business may qualify for SHOP
SHOP stands for Small Business Health Options Program. Any small business in Oregon with 1 to 50 employees can purchase a certified plan from one of the participating insurers. Click here for a list of 2022 Qualified Health Plans for Small Group in Oregon.
Your business qualifies if you:
- Have an office or employee work site within the SHOP’s service area.
- Have 50 or fewer full-time employees. An owner can count as an employee but needs to have at least one other employee to be eligible.
- Offer coverage to all of your FTE employees (works about 30+ hours/ week for more than 120 days in a year).
- Enroll at least 70 percent of your FTE employees in your SHOP plan.
Now, let’s find out if your business is eligible for tax credit:
Your business can qualify for tax credits if you meet the following criteria:
- Employ fewer than 25 full-time equivalents (FTE) employees (not including family members of owners/partners or seasonal workers who work fewer than 30 hours a week and more than 120 days during the taxable year)
- Pay average annual salaries of $50,000 or less per employee
- Pay at least 50 percent of FTE employees’ premium health care costs
- Purchase a certified medical or dental plan from a participating insurance company in Oregon.
When to enroll in Group Health Insurance?
- You can enroll any time of the year, no need to wait for an open enrollment period.
- At any time of the year, you can add employees or dependents on the group plan.
- At the end of the year, you can renew or change coverage.
Do Oregon employers have to provide health insurance?
For a small business with less than 50 full-time employees, there’s no penalty for not having health insurance. But of course, if you want a productive work environment so you may consider getting health coverage for your employees.
What if you have more than 50 employees? If you have more than 50 FTE, you may face fines if you don’t provide group health coverage. The price of the lowest health insurance plan should not be more than 9.69% of an employee’s annual income.
What if an employee declines the insurance offer?
If an employee decides to not sign up for a health insurance plan, he/she can sign up for a plan thru Health Insurance Marketplace during open enrollment period (Nov. 1 to Dec. 15) but financial help will no longer be available.
The advantage of providing health insurance to your employees:
Investing in health benefits for your team can give your small business a competitive advantage. Policy premiums are deducted from salary schedule, in contrast to individual health plans in which the policy premiums are paid outside of payroll.
Health coverage options for employers and employee
Employer-sponsored group coverage
Small employers with 50 or fewer employees may be eligible for small group coverage. If you have fewer than 25 FTE (full-time equivalent), you may be qualified for the Small Business Health Care Tax Credit. Large employers with more than 50 FTE must offer employer-sponsored health coverage to their employees that meet the employer’s shared responsibility provisions.
Individual health coverage
Individuals and families who work part-time may qualify for Oregon’s Medicaid program, also called Oregon Health Plan, which is free coverage for low-income Oregonians.
People who are not offered employer-sponsored health coverage, Oregon Health Plan, or Medicare can purchase health coverage through a health insurance company or through the Marketplace. Financial assistance is available through the Marketplace to lower the monthly premium and deductibles, based on income.
Federal health coverage program through Social Security for people who are 65 or older, are on Social Security Disability for more than 24 months or have an end-stage renal disease (ESRD).
Association health plans
These plans allow many small- to medium-sized companies the ability to come together under one health plan, potentially reducing costs and increasing benefit options. There are rules around these organizations and criteria to participate. These plans are not regulated or guaranteed for essential health benefits or pre-existing conditions.
Health reimbursement arrangements
- HRAs allow employers to grant pre-tax funds to help employees pay for medical expenses.
Unlike individual health insurance, which has a set enrollment window, small-group coverage is available year-round,
If you have at least one employee who receives a W2, you can purchase coverage for yourself and your workers at any time. Small businesses with one to 50 employees can purchase a plan from any insurer offering a small-group plan in Oregon.
That offered employer-sponsored coverage will likely not be eligible for financial assistance.
Small Business Health Options Program (SHOP)
The Small Business Health Options Program (SHOP) helps businesses provide health coverage to their employees. This is generally applicable to employers with 1- 50 Full-time equivalent employees. If you have fewer than 25 employees, you may be eligible for the Small Business Health Care Tax Credit.
There are two options to enroll in SHOP insurance coverage:
1. Through an Insurance Company
2. With the help of a SHOP- registered agent or broker
SHOP Insurance Benefits
- You decide what coverage you offer and how much you pay for your employee premiums.
- You have options from high-quality private health insurance plans that fit the needs of your business and employees.
- You are able to choose to offer health only, dental-only, or both health and dental coverage.
- Coverage starts any time of the year.
If you have fewer than 25 employees, you may be eligible for a Small Business Health Care Tax Credit that is worth up to 50% of your premium costs (up to 35% for tax-exempt/non-profit employers). The rest of your premium costs not covered by the tax credit can still be deducted from your taxes. The tax credit is basically available only when an employer offers SHOP plans. Use the Small Business Health Care Tax Credit Estimator to find out if you qualify and how much you can save.
NOTE: The maximum tax credit is 50 percent of the amount you pay toward your employees’ premium costs (35 percent for tax-exempt employers). You do not need to offer coverage to your part-time employees or to dependents to qualify for the tax credit.
Difference between Group Health Insurance and Individual Health Insurance:
If you are purchasing an Individual Health Plan, there may be times when an individual can be denied insurance due to some eligibility restrictions such as immigration or residency. Obtaining health insurance through an employer helps retain and rewards staff, and may help reduce tax obligations as well.
As an employer, your contributions become tax-deductible, payroll taxes are reduced by 7.65 percent and your workers’ compensation premiums are lowered as well.
Buying in bulk often saves money. Therefore, Group Health Insurance plans are traditionally more affordable than Individual Health Insurance plans. It allows employers to offer quality coverage at a discount, and coverage us automatic.
Key Features of Group Health Insurance Plans
Since employees are the most priceless assets of a company, it’s important they be aware of the many benefits group health insurance provides.
Cashless medical services at in-network hospitals
Employees covered in a group health insurance do not have to go thru exhausting tasks of filling out forms when hospitalization occurs. The cashless transactions within in-network facilities are said to be among the most valued feature of group policies.
Also, most group health insurance plans do not have waiting period clause, meaning an employee qualifies for coverage of the group health insurance plan from the first day on the job even for chronic illness.
Pre-and post-hospitalization expenses
A group health insurance policy also provides coverage for pre-and post-hospitalization (lab tests, x-rays, medicine, and consultation) expenses for a specific period as per mentioned in the policy document.
Steps to claim the tax credit:
- Directly purchase a certified medical or dental plan from a participating insurance provider.
- Inform your insurer that you want to apply for the tax credit (agents can do this for you). The insurance company will contact the Oregon Health Insurance Marketplace to request a letter of confirmation that the plan you purchased is verified.
- The Oregon Health Insurance Marketplace will send the letter of confirmation to you, your agent, and your insurance carrier.
- File the confirmation letter with your taxes when applying for the small business tax credit.
Get free help from your local, licensed, certified, 5 star reviews and well experienced licensed insurance agent.
If you need a group insurance quote and side by side comparison of most group insurance carriers in Oregon, please contact us and we can email, mail or call you with a quote right away. We value the money you put into your business and your employees’ healthcare, that is why we aim to provide you with the most affordable and efficient health plans for your small business. We can get you reliable quotes from most of the health insurance carriers in Oregon such as Moda, Kaiser, Regence Bluecross Blueshield, Pacific Source and more!
Get free help from your local, licensed, certified, 5 star reviews and well experienced licensed insurance agent.
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