Health insurance tips for small-business owners
Here are some suggestions from experts for small businesses deciding whether to offer employee health insurance in 2014:
1. Consider the nature of your business.
Small companies made up primarily of owners — such as physician and dentist offices and architectural and CPA firms — are likely to find that it makes financial sense to provide employee insurance, healthcare consultant Robert Laszewski says. “I expect they’ll continue to offer insurance through the group model because that’s the way to get tax-deductible health insurance. They also have to compete for skilled workers.”
On the other hand, he says, a dry-cleaning shop or mom-and-pop restaurant that hires minimum-wage or unskilled workers may find it makes more sense to skip group coverage.
2. Don’t forget about the tax benefits of providing healthcare.
The federal government makes tax credits available to most companies with fewer than 25 low-wage employees to help cover the cost of insurance. A tax credit of up to 35% of what a company pays for health benefits is available today, and that increases to 50% in 2014 for businesses that buy insurance through their state’s online health insurance market. In California, 80% of small businesses are expected to qualify for a tax break.
3. Keep in mind what your employees want.
Employees newly required to have health insurance under the law may want to get it from their employer, Linda Blumberg at the Urban Institute says. With that in mind, employers may feel encouraged to offer coverage.
“So you might end up seeing what we saw in Massachusetts, which is somewhat of an increase in the rate of employer-sponsored insurance coverage,” she says, referring to the health reform law Massachusetts passed in 2006.
4. Remember subsidies when weighing whether to offer health benefits.
When trying to decide whether to get a group policy, don’t forget that your employees might be better off buying an individual health insurance plan through the state exchange — especially if they qualify for a federal subsidy. (Families of four with a household income of roughly $92,000 per year will qualify for tax subsidies. Low-income workers in California may be eligible for even bigger benefits under Medi-Cal.)
Ask yourself: “If most employees could qualify for premium help through the individual exchange, am I doing my workers any favor by offering group coverage?” healthcare lawyer Gary Bacher says.
5. Don’t feel pressured to rush to a decision.
“Do absolutely nothing until this shakes out,” says healthcare consultant Laszewski, noting that there’s not much information available right now. “I might wait a year, because what the exchanges look like and what the prices look like the first year may not be what they look like the second year,” he says.
And “don’t panic,” says Sam Gibbs of the online health insurance marketplace EHealth Inc. “Things will change, but it’s not as bad as you think.”
