In this article, you will know the cost-effective option for your business, the summary table of health insurance cost and how we made it, the advantages of group and individual health insurance, and how to choose the best option for your business. This article will greatly help small business owners evaluate the health insurance cost for their employees. You will be able to identify which option works best for your business and your employees.
There are hundreds of plans related to health care that small businesses can easily avail of as these plans differ broadly by state. We can’t settle on any one plan for all businesses, but we can definitely go to Gusto, the best payroll provided, and offer health benefits.
If an average employee in your company earns 50,000 dollars a year, you must not provide them with group health insurance. Your business can either offer additional funds to them, which is the most profitable option. This can also be used to balance the employee’s cost associated with purchasing an individual health insurance policy.
If your regular employee earns over 50,000 dollars, you can consider providing them with group health insurance.
Summary Table of Health Insurance Cost for Small Business
Average Monthly Premium For Health Insurance For Each Employee. Mentioned below is the Silver Plan, which is the second-lowest in cost.
|Age||*Obamacare Individual Exchange||*Private Individual Exchange (eHealth)||SHOP Small Business Exchange||Private Small Business Exchange (eHealth)|
The above table does not contain the potential subsidy described below:
How We Made This Table
You will find below the four essential options for small business owners who have to get their employees’ health insurance. These options are:
Offering Group Health Insurance through:
- Traditional Group Insurance – Purchasing this plan via a private online exchange or a broker like eHealth.
- SHOP Exchange – Getting a group insurance plan via the website of Obamacare, healthcare.gov. The full form of SHOP is the Small Business Health Options Program.
Offering Your Employees Money so that they can Purchase Individual Insurance through:
- Private Individual Insurance – You can give your employees money so that they can buy insurance via a private online exchange such as eHealth or from a broker.
- Obamacare Individual Insurance – You can also give your employees money to purchase this insurance through healthcare.gov.
You will have various health plans to purchase to make an accurate comparison; we can compare the second-lowest in cost silver plan (health insurance plan), which we think demonstrates a standard health plan. Then, we calculate that plan’s cost based on each employee by using all the four purchase avenues mentioned above.
From Where We Obtained Rates?
To find the price for Obamacare individual insurance and Group insurance of SHOP exchange, we headed straight to healthcare.gov. We also used eHealth.com, a site that combines several different providers to find the price for conventional and private group insurance.
How Do Individual Subsidies Impact the Health Insurance Costs of Small Businesses?
If the employee in your company makes less than a particular amount (for instance, 46,680 dollars for an individual and 95,400 dollars with a family having 4 people), they can use a health insurance subsidy to buy individual insurance. However, your employee cannot obtain this subsidy if you provide a group plan. This is right even if the employees don’t go for the group plan.
Considering you don’t provide them with group health insurance and fulfill all the income requirements to be qualified for a subsidy, the health insurance premiums and high costs can be reduced significantly. This concerns all such plans on eHealth and healthcare.gov. You can use the below tool to find out the amount they could save:
If you provided group health insurance via the SHOP exchange, your business might be eligible for a tax loan of 50% amount that the business devotes to premiums. To be eligible, you should have less than 25 employees in your company, and their average salary should be below 50,000 dollars. The tax credit is only important, although if you have like 10 or fewer employees and their average salary goes around 25,000 dollars or lower.
Individual Health Insurance Advantages
When you review this chart, you will find individual health plans that are much cheaper on average than group plans, meaning that you should give your employees extra pay instead of buying them group health insurance so they can get their own plans. Most importantly, your employees have the liberty to select their plans and enjoy lower rates.
If they wish to seek federal subsidies, they can, but they aren’t available currently to employees who earn below 46,680 dollars or 95,400 dollars for a family of 4 persons. It can be a very generous subsidy; like someone 25,000 dollars a year could easily save their premiums of up to 32% if you go for group health insurance. However, the subsidy might not be available. If employees choose a plan you don’t have and get their own policy, they cannot apply for a subsidy. Therefore, if individual exchanges meet your costs, give your employees more liberty of choice, and potential subsidies, why even opt for group health plans?
Group Health Insurance Benefits
For several small businesses, if your employees are eligible for subsidies, the individual route is the best way. However, there is still a significant case that needs to be completed for group health insurance. They hold an essential advantage that your business and your employees can pay for coverage using pre-tax dollars. Your role will not be liable to payroll tax. In the same manner, the contribution of your employees will not be liable to income tax. Therefore, if your employees come in a high tax bracket, the most cost-effective option is group health insurance, for that matter.
Deciding the Best Option For Your Business
There are a few basic thumb rules to find out if you should consider a group plan or an individual plan:
- Consider individual plans if your employee’s earnings are below 45,000 dollars per year. They will be eligible for subsidies. But if you offer them a group plan, you will be taking this away. Even if your employee makes more than 50,000 dollars per year, they will be eligible for subsidies if they have children or spouses. A family of 4 persons that makes 50,000 dollars can get 62% of the premiums reduced by a subsidy.
- If your employees come in a grand tax bracket and can’t apply for subsidies, get group health insurance from a private exchange or SHOP. Your employees and your business can pay for coverage using pre-tax dollars, which can result in great savings for your employees and your business.
Some Things to Always Remember
Healthcare.gov has comparatively lower rates as compared to eHealth. However, this does not mean that their plans charge less. It simply means that their silver plans are easily affordable, and one can conveniently choose from them. Moreover, costs differ greatly among regions. If we talk about specific areas, eHealth has the edge.
When you remember that, you will be on the right way to find the perfect coverage for your small business. Last but not least, Gusto offers the ideal package for your employee. You can check various health benefits plans and get the best one according to your employees’ budget.