Setting Up Health Insurance for Your Business & Employees

Am I required to provide health insurance to my employees?

It depends on the size of your company. Groups under 50 are not legally required to provide health insurance, but there are many reasons that small businesses would want to provide insurance plans to their employees.

Once a business reaches 50 employees, it is required that you offer all your eligible employees an affordable health insurance plan. Which employees are eligible is up to the employer’s discretion. The eligible employees are then allowed to choose or to waive the coverage.

Either way, it must be documented that the employee either waived or chose the coverage, or else you will be fined by the IRS.

businesswoman calculating costs

How much does business health insurance cost?

This is dependent on what plans you want to offer, the number of employees you have, the county you’re in, the ages of your employees, and other factors. You can decide how much to contribute toward your employees’ premiums, and this affects your costs as well.

The plans you offer to your employees must be affordable. Affordability is determined by using one of three safe harbors:

  1. Rate of pay safe harbor
    This is determined by calculating 9.83% (for 2021) of an hourly worker’s income.
  2. W2 safe harbor
    This is determined by calculating 9.83% (for 2021) of the amount in box 1 on the employees W2 (gross income).
  3. Federal Poverty Line safe harbor
    This is determined by calculating 9.83% (for 2021) of the federal poverty level ($12,760 for 2021) making the maximum employee contribution $104.53 (for 2021).

Employers may use any of the above safe harbors to calculate if the plan they are offering is affordable. You can go with any of the three that you want – you don’t have to go by the lowest or the highest safe harbor. Based on the W2 wages or rate of pay you offer, this affects the employer’s health insurance costs.

You don’t have to put anything toward your employees’ premiums, you just have to ensure the plan they are offered is affordable. To ensure it’s affordable, you may want to cover a percentage of premiums, however, depending on what constitutes affordability based on the safe harbors listed above.

Give us a call and we can help you walk through the process, and can give you a better idea of what it will cost you once we know your specific situation.

What are my insurance options as a business owner?

If you have two employees you can get small group insurance for your employees. If the first employee is the owner, the second employee must be a common law employee and not related to the owner.

You can start coverage at any point of the year. You don’t have to wait for a qualifying event to start coverage. As long as you get all information needed in time, you can start the first of any month you choose. For businesses providing coverage, rates are locked in for 12 months.

There are two different categories of group coverage based on the size of the company. Small group coverage works for companies with fewer than 50 employees. Large group coverage is for companies with 50 employees or more.

For small group coverage, we work with:

  • Blue Cross Blue Shield
  • HAP (Health Alliance Plan) of Michigan
  • Priority Health
  • United Health Care (UHC)
  • Total Health Care (THC)
  • McLaren

For large group coverage, we work with:

  • Blue Cross Blue Shield
  • HAP (Health Alliance Plan) of Michigan
  • Priority Health
  • United Health Care (UHC)
  • Total Health Care (THC)
  • McLaren
  • Aetna
  • Cigna

Small group insurance for business

Benefits of small group insurance

  • First-dollar benefits are co-pays that don’t apply to the deductible, and aren’t available in most individual plans
  • Adding benefits like health insurance is a way for smaller companies to attract talent and compete with larger companies
  • Employer-sponsored plans are generally better than individuals can obtain on their own, and this can go a long way for employee security, health & happiness

Self-funded insurance plans for business

Self-funded plans are different from full-funded plans. Fully-funded plans are more common and follow the usual method in which the business pays the insurance company for the policies, and then when a claim is made the insurance company handles processing and filling the claim.

In a self-funded plan, the employer works with the insurance company to pay their own claims. The insurance company helps with the creation of a pot of funds, used to pay out claims. There is generally a maximum amount that the employer will have to pay out each year, negotiated with the insurance company when the policy or contract is written.

Benefits of self-funded plans

  • You have much more control over the specific offerings to employees
  • Self-funded plan can be less expensive than fully-funded plans, since you’re only paying for actual expenses incurred

Difficulties of self-funded plans

  • The employer is responsible for paying claims until the maximum claims amount is reached
  • Since you’re paying actual claims, employers’ expenses can fluctuate greatly from month to month and can make cash flow unpredictable
  • Employers need an appetite for risk-taking to go with self-funded plans, since annual claim expenses might outweigh what you would spend on fully-funded plans annually

Health Reimbursement Arrangements (HRA) for business

HRA or Health Reimbursement Arrangement plans are employer-funded coverage. The employer puts funds in a reimbursement account for employees to use, as opposed to HSAs, where employees fund the HSA account, normally.

An HRA can be used by employees to shop for and purchase their own plan. HRAs are a great tool for companies that want to ease the burden of high deductible plans which make them more affordable for employees.

Benefits of HRAs for business

  • Unused funds are returned to the employer at the end of the year
  • Employees shop for and pick out their own plan

Difficulties of HRAs for business

  • The HRA account is funded directly by the employer

How do I decide on a health insurance plan for my business?

When we meet with employers, we bring a few examples of health insurance plans that might work for them. There isn’t an easy answer, but we can help you run through all the different scenarios. Maybe you decide to go with a robust plan with a small deductible, and you contribute nothing to the deductible. You could provide a bronze-level plan for employees but provide them with funds in an HSA.

There are so many different ways to structure your insurance offering, while keeping in mind affordability, and we can walk you through the whole decision making process. Just communicate to us what your priorities are, whether they’re maximizing savings, attracting talent, keeping your employees healthy & happy, or others.

What are the benefits of working with an independent agent to set up health insurance, like the agents at Autumn Insurance?

At Autumn we can not only guide you through the process of choosing the right health insurance for you, your company and employees, but we can also handle enrollment, changes to enrollment and growth, interfacing with the insurance company, billing, and provide an online portal for your employees to enroll instead of filling out paperwork.

We help you with the application process and can instruct you on the parts of the application that we can’t fill out for you. We also can help you navigate the requirements of the Affordable Care Act.

As far as savings, the rates are what the rates are. If you provided all the same information and documents directly to an insurance company, the rate you get from them is not going to be different from the rate we would find with matching information, from the same insurance company. The rates are the same regardless of who runs the quote. The exception to this is when combining plans and ancillary plans, some companies will give bundle pricing. One example is adding dental coverage to an existing health plan.

If your representative isn’t proactively looking for these kinds of rates savings, you may not find out about the savings opportunity. We will stay aware of any savings that may be available when including multiple plans in a bundle together. We also have a two-hour reply commitment at Autumn Insurance. You can expect to hear back from us that quickly.

We can help you customize your insurance policies to fit your needs. Types of plans we can help you provide to your employees include:

  • Major Medical including outpatient services and hospitalization
  • Dental
  • Vision
  • Basic Life Insurance including accidental death & dismemberment
  • Long-term disability
  • Short-term disability
  • Voluntary Life Insurance to cover spouses or children
  • Hospital Indemnity
  • Critical Illness

For ancillary plans, outside of basic medical coverage, we work with:

  • United Healthcare
  • Principal
  • Mutual of Omaha
  • AlwaysCare
  • Delta Dental
  • Guardian
  • MetLife
  • Hartford
  • Unum
  • Auto-Owners

Contact Us

We’ll review your options. Without obligation.

Because finding the right coverage before a loss occurs is a smart move.

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