What is The Difference Between Large Group Insurance and Small Group Insurance
As a business owner, health insurance is one of the largest expenses you incur. A confusing political climate is another factor making it difficult to understand your options. In fact, the latest Mid-Term elections have suspended the ACA and group health insurance laws in thin air.
Even so, it’s critical to continue to maintain health insurance for your employees. Even if for the benefits you can offer employees to improve morale and quality candidates.
The next best question is, what type of health insurance coverage do you need for your business. Depending on your size, you may need small or large group insurance.
Not sure what type of group health insurance you need or the benefits of each type of insurance? Then consider the following information.
Small Business Group Insurance
Small business group insurance is one option for businesses in Texas. Here are the requirements, expectations, and benefits of group health insurance.
To qualify for small business group insurance you have to have fewer than 50 Full-Time Employees. You will not be responsible for meeting the ACA’s employer shared responsibility 2018 provision. You won’t be bound legally to pay a percentage of your employees’ group health insurance premiums, enabling you to provide affordable coverage.
Interestingly, a small business can be approved for a Small Business Health Care Tax Credit. This tax credit is equal to 50 percent of the premiums that you pay for employee health insurance. You must also have no more than 25 Full-Time Employees. Annual wages for employees must not exceed $52,000. You would also have to purchase your group policy through the SHOP marketplace. For small group health insurance, you won’t have any minimum contribution requirements to meet either.
Keep in mind that the ACA’s employer mandate is still in place, even in 2018. This lay requires applicable large employers to offer a certain percentage of their full-time equivalent employees minimum essential coverage per the law.
This means that if you employed a combination of 50 or more FTE employees for at least six months of the previous year. Any small business that doesn’t meet this definition will not be subject to the employer mandate and will not need to offer health insurance coverage.
Small business group health insurance also has its own benefits. If you are a small business owner, you might want to know what these benefits are.
Any employer that incurs expenses related to health insurance is 100% tax deductible as tax business expenses. This is for both state and federal taxes. However, once you get beyond this, taxes become much more complicated. Employees, for example, can be set up to save tax money and can contribute to the cost of health insurance on a pre-tax basis. You can then deduct the cost of the premium from employee’s paychecks before their federal and state taxes are deducted. This gives them more take-home pay and lowers their taxable income.
Small business health care tax credits are perhaps one of the greatest advantages to small business group health insurance. To offset the costs of health insurance, you can take advantage of these credits. Purchasing small group health insurance enables you to give your employees what they’re looking for while maximizing your investment.
But what if you have a large business? What can you expect with large group insurance?
Large Group Insurance
Large group health insurance is subject to the Affordable Care Act. It requires large employers to offer coverage to full-time employees or be subject to a penalty. This is called the play or pay rule, and it went into effect in 2016.
To qualify for large group health insurance, businesses must have at least 100 full-time equivalent employees. They are also required to cover up to 95 percent of full-time employees. Employees are considered full-time if they work at least 30 or more hours per week. Regardless of the type of insurance they choose, all large group health insurance options have to meet the ACA’s minimum essential health benefits with no lifetime or annual health benefit maximums.
One of the greatest perks of choosing a large group health insurance plan is lower rates on health plans. Large group plans should be designed for the needs of employees, and as they are designed to do so they become a bit more affordable. This, in turn, benefits your employees as much as you. You can also enjoy certain business tax breaks when you choose to comply with large group health insurance laws.
How Large and Small Group Insurance is Different
Large and small group health insurance is different in several ways. Perhaps the most obvious is the size of their coverage. Small and large group health insurance is not quite as straightforward as the name implies. States to have their own definitions of what a small group and large group health insurance entails.
For example, in most states, like Texas, small groups have between 1-50 employees. Anything beyond that is considered to fall under large group health insurance. The biggest differences between these two groups are prices and regulations. However, your group may fall under a different categorization.
Under the Affordable Care Act, small group insurance falls under many different factors that can and will impact rates. This, in turn, is based on the location of the business, the average age of your enrollees, and even tobacco usage.
For large group health insurance, other factors are used to calculate group rates. With small group coverage, for example, the same price is listed for every employer. Regardless of what broker you use to purchase group insurance your prices are typically the same no matter what plan option you choose as well.
Large group coverage, however, is more sensitive. It requires the assistance of a broker who understands the market to negotiate on your behalf. A broker can make a big difference in the final amount you pay and what type of plan coverage you end up with. In other words, your price rates for your group coverage are often determined by the broker you choose.
How We Can Help
For businesses in Texas, you have to have at least two employees and a 70 percent participation rate in order to provide a group health insurance policy. However, the right broker can save you thousands. When you are ready to sign up for a new group health insurance policy, reach out to our team at Healthcare Consultants Inc. for advanced support from a team of brokers who know how to get you the results you’re looking for.