doctor and patient going over paperwork
While small businesses can't always offer the same benefits that larger businesses can, there are still a variety of ways they can offer health insurance to employees. — Getty Images/SARINYAPINNGAM

Health insurance is just one of the benefits small businesses can offer their employees to stand out in this competitive job market. With unemployment at a nearly 50-year low, small business owners can attract talented employees by finding the right balance of passion and non-financial perks to improve employee engagement.

In 2019, despite changes to the Affordable Care Act (ACA), companies with more than 50 employees are still required by the federal government to provide health benefits. If you employ fewer than 50 employees, you are not mandated to provide health coverage; yet, research shows that healthcare is the number one benefit employees look for in a company. Eighty-five percent of employees at small businesses say that health benefits impact their loyalty to their employer.

How can you get health insurance for your employees? Read on to learn more about purchasing health care for your small business in 2019.

Know your options

The following are the five most common health care options available to small business owners:

  • Qualified small employer health reimbursement arrangements (QSEHRAs). A QSEHRA allows you to provide a monthly tax-free allowance to your employees, providing them with the flexibility to pay for health care, a personal insurance policy or be reimbursed for their allowance amount. The 2019 QSEHRA contribution limits are $429.17 a month per single employee and $870.83 a month for families.
  • Traditional group health insurance. In this instance, a small business takes out a group insurance policy through a traditional, national corporation or a local company sourced through the public Small Business Health Options (SHOP) marketplace. The business pays a fixed premium for the policy and employees are responsible for deductibles and copays.
  • Health Reimbursement Arrangement (HRA). An HRA is funded by the employer and allows employees to pay for medical costs not covered by their health plan. In this scenario, employees are offered a monthly tax-free allowance in addition to the group policy. Employees can choose what to pay for and then be reimbursed up to a certain amount.
  • Self-funded health insurance. Instead of paying a fixed premium to an insurer, the small business pays out-of-pocket for each claim as it arises under the self-funded insurance option. It increases the financial risk to the small business, but depending on the size of your enterprise, it might be more cost effective in the long term.
  • Association health plans (AHP). Finally, an AHP allows small businesses within the same industry or region to go in for a large-group coverage plan together. The drawback is that AHPs don’t have protection under the ACA rating rule, which prevents insurers from varying costs based on things like age, sex or health status.

Each of these options presents different costs and benefits. Do some research to determine which option is right for you — depending on your location, the size of your business and your budget.

Where you go to find a plan depends on the size of your company and where you’re located.

Shop for a plan

Where you go to find a plan depends on the size of your company and where you’re located. The easiest option for nearly every small business is to check out your state’s health insurance exchange marketplace. This site is built to let you compare plans and companies with ease.

If you’re a sole proprietor, consultant or freelancer, some states allow “groups of one” to purchase group insurance if you’re registered as a business. Otherwise, you will need to buy individual or family health insurance through the ACA health insurance exchange, or set up an HRA.

For small businesses with between two and 50 full-time employees, there are other places to buy insurance. Contact health insurance companies directly to find out what plans they offer. Look to consumer review sites like Consumer Affairs and the National Committee for Quality Assurance (NCQA) to find reputable companies who can be trusted. Or, work with an insurance broker, a certified professional who can help you shop for the best plan.

Find out the full details of the coverage, including:

  • The health care provider network.
  • Premiums, deductibles, copays and coinsurance payments.
  • How much choice your employees will have.
  • The insurance company’s reputation.

With this information, you can make a smart decision about which health insurance plan to purchase.

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

Published July 25, 2019