Health Insurance Options For Very Small Businesses

You’d be forgiven for thinking that because you only have one employee, you therefor cannot afford health insurance, but there are in fact, several options for small business health insurance, and here are just a few:

  • Group health insurance:

Even if you only employ one person, you may still qualify for a group plan depending on how the state that you’re in, defines the term ‘group’. If your small business has an owner and an employee, insurers in every state are required by law to issue you with a group policy, but if there is just one employee who is also the owner, then not all states are required to do so.

However, just because you qualify for group health insurance, doesn’t automatically make it the best health insurance option for you, and it can be more costly than other types of small business health insurance. If you plan to expand your business and hire more workers, a group health plan may see your employees leaving to find a better deal elsewhere, as such plans are not particularly flexible and are hard to personalize.

  • Health insurance stipends and wage increases:

Some small businesses choose to offer their employees an informal health insurance stipend or wage increase, based upon the assumption that they will use the extra money to help pay for health expenses. However, this extra money is taxable to both the company and the employee, and of course there is little guarantee that the worker will use the money to contribute to their health insurance.

  • HRA’s:

HRA’s give employees a monthly tax-free allowance to use for health-related expenses, meaning that they can purchase a health care policy and the company will reimburse them up to their allowance limit. Companies can then have more control over their benefits budget, while their workers have the freedom to purchase a health care policy that best suits their needs. For businesses with just one employee, there is a stand-alone HRA and for the qualified small employer, an HRA (QSEHRA). If you currently have only one employee but plan to expand, then the QSEHRA might work in your favour, as it’s available to businesses with up to 49 employees.

Making an informed decision as to which health insurance policy would best suit you and your business, is only possible with the most up-to-date information, and this can be found when speaking to your local payroll provider or health insurance specialist.

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