Do Small Businesses Have to Provide Health Insurance?

Roughly half of the nation’s population relies on employer-based health insurance. For many people, access to employer-subsidized coverage impacts their decision to pursue a job with a given company.

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On the employer’s end, providing health insurance can be costly and complicated. However, it can also be a reliable way to bring in new hires, improve productivity and boost morale and job satisfaction. Small businesses that want to provide this benefit have options that let them do so affordably.

Health Insurance Requirements For Small Businesses

Current Health Insurance Laws for Small Businesses

Under the Affordable Care Act, businesses with more than 50 full time employees are required to provide ACA-compliant health insurance or face financial penalties. However, small businesses with fewer than 50 employees do not have this requirement.

Reasons to Provide Health Insurance

While small businesses are not required to provide health insurance coverage, more than half of them do. It is an added business expense, but many business owners consider it to be a worthwhile investment for numerous reasons.

  • Attracting and keeping employees: Worker shortages can hit small businesses hard, especially when those businesses cannot offer the same salaries as larger corporations. Even so, due to factors such as better work cultures, many people prefer to work for small businesses. Offering health insurance benefits may make it more feasible for them to do so.
  • Build a healthier workforce: Employees that have access to preventative care often take fewer sick days, which can maximize your business’s productivity.
  • Save money: After running the numbers, many business owners are surprised to learn that providing health insurance doesn’t significantly impact their bottom line. The ACA’s Small Business Health Options Program may provide a tax credit to offset some of the expense.

Ways to Purchase a Health Insurance Plan

Small business owners have several options for purchasing health insurance for employees. These include:

  • Group health insurance plans
  • Qualified small employer health reimbursement arrangement (QSEHRA)
  • Association health plans

A health insurance agent can help you weigh the pros and cons of each option to determine what is right for you.

What Is the Minimum Employer Contribution for Health Insurance?

If you opt for a group health insurance plan, your small business must pay at least 50% of the health insurance premiums for your full-time employees. The ACA also requires you to allow parents to keep their dependent children on their policy until the child turns 26. If you buy health insurance through the QSEHRA, then you have the freedom to decide how much money you give employees.

It’s not all Roses!

When you offer health insurance to your full-time employees, if your employee was receiving a government subsidy from Nevada Health Link, they will most likely no longer be eligible for Government assistance! You may think this isn’t a big deal, however, if they have a spouse and children, your group offering of coverage blocks them too!  So, offering group coverage to your employees, but not helping to pay for spouse and children, can hurt them. It is critical to speak with a licensed agent to find out the details of this rule with the ACA (Obamacare) rules. 

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Finding Small Business Health Insurance with Nevada Insurance Enrollment

Providing health insurance is a great way to attract and keep employees, particularly when there is a labor shortage. If you want to find out if providing health insurance is feasible for your small business, our health insurance agents can help. At Nevada Insurance Enrollment, we specialize in helping small business owners find solutions that fit the needs of their employees as well as their budgets.


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