What California Business Owners Need To Know About Group Health Coverage
If you’re a California employer planning to offer your workforce affordable health insurance coverage with great benefits, our employer guide to the Affordable Care Act (ACA) for 2022 is here to help.
Although the ACA (what we often call “Obamacare”) does not require businesses with fewer than 50 full-time employees to offer group health insurance coverage to their employees, many smaller companies choose to do so anyway, because providing employees with this valuable benefit can give businesses a competitive advantage.
Reports have shown that providing group health insurance increases productivity as employees stay healthier and use fewer sick days. Coverage is also an attractive benefit that can help your California small business recruit and retain top talent. But offering group coverage also comes with equally valuable financial incentives designed to encourage more small businesses to enroll in plans under the Affordable Care Act.
Even though the COVID-19 pandemic continues to create uncertainty, California business owners are looking to the future with hope and optimism. If your future plans include offering group health insurance coverage to your employees, here is a brief employer guide to the Affordable Care Act in 2022.
Employer Guide to the Affordable Care Act: How Does Group Coverage Work?
When California employers offer ACA-compliant health insurance coverage to their employees, they usually do so through group health insurance plans. Carriers that offer group health insurance plans specifically tailored to the needs of California’s small employers include:
- Anthem Blue Cross of California
- Blue Shield of California
- HealthNet of California
- Kaiser Permanente
Here’s how signing up for group health insurance coverage works. Your company enrolls with an insurer and purchases insurance coverage for the “group,” consisting of your employees and dependents. You can elect to cover full-time employees only, or also offer coverage to part-time employees.
When your small business enrolls in a group plan, the company will typically pay the insurance company the full fee for the plan while also deducting contributions from the paychecks of employees who enroll in the program. The amount of those contributions may vary depending on whether an employee only needs coverage for themselves or for their family.
If you decide to offer group health insurance coverage to your employees, you must offer it to all eligible employees when they become eligible to enroll in such coverage. Additionally, you must provide each employee with a standard “Summary of Benefits and Coverage” (SBC) form that explains the benefits your plan offers and what it costs to participate in the plan. Since managing such eligibility requirements and forms requires time and dedication, many small businesses choose to utilize the services of an independent, licensed group health insurance broker like Preferred Insurance.
Small Business Health Options Program (SHOP)
The Affordable Care Act established a program specifically designed to encourage more small business owners to offer coverage to their employees even though the law may not require them to do so.
Small employers (generally those with 1-50 employees) may be able to enroll in plans through the Small Business Health Options Program (SHOP) directly with a participating health insurance company or with the assistance of a SHOP-registered agent or independent broker.
If your business qualifies for a SHOP plan in California, you can generally enroll in such a plan at any time. To be eligible to enroll in group health insurance coverage through SHOP, your small business must:
- Have a primary business address in the State of California.
- Have at least one employee enrolling in health insurance coverage who is not the business owner, business partner, or spouse of a partner or owner.
- Have from 1 to 50 full-time equivalent (FTE) employees.
- Offer SHOP coverage to all full-time employees.
Small Business Health Care Tax Credit
California small businesses that offer their employees group coverage through a SHOP plan can get tax credits of up to half of the premium expenses they incur during any two-year period. Under IRS rules, a business can generally claim the small business health care tax credit if it offers a health plan through SHOP and :
- Has fewer than 25 full-time equivalent employees;
- Pays average wages of less than $50,000 a year per full-time equivalent employee (indexed every year for inflation);
- Pays for at least 50 percent of the cost of employee-only coverage for each employee.
In addition to the Small Business Health Care Tax Credit, small companies who offer healthcare to their employees can deduct 100 percent of all health insurance-related expenses that the business pays as ordinary business expenses under both federal and state law.
Speak With One Of Our California Small Business Health Insurance Brokers Today To Learn More.
Helping California small businesses navigate the complicated landscape of the Affordable Care Act and group health insurance coverage is just one way that Preferred Insurance helps them ensure that their workers stay healthy and covered. As an experienced California small business and individual health insurance broker, we can answer your questions and provide practical, affordable coverage options for businesses of all kinds.
Call Preferred Insurance today to schedule your free consultation with one of our experienced brokers to discuss your small business health insurance needs.