Group Health Insurance FAQ’s

See the list of Frequently Asked Questions on Group Health Insurance below.

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Why should I offer group health insurance to my employees?

Providing a quality health plan to your employees helps you as a business in many ways.  First, you are able to attract better quality employees when offering benefits.  Think of it as part of their compensation package.

Second, if you provide health insurance to your employees, they are more likely to go to the doctor and catch potential conditions in the early stages.  If your employees don’t have health insurance, they may wait to see a doctor and by the time they catch the condition, they are sick.

By providing health care to your employees you keep a more stable, happy and healthy workforce which means you as a business are more successful!

Is there a fine if I don't offer coverage?

Only groups with more than 50 Full Time Equivalent Employees will face if they do not provide coverage starting in 2015.  If your group has less than 50 full time equivalent employees, you do not need to provide coverage and will face no fine if you choose not to.

How much do I have to pay towards my employee's premium?

Depending on the industry, it is common for employers to pay around 75%-100% of the employee portion of premium, and dependents are paid for by the employee at 100%.

Starting in 2015, for groups over 50 Full Time Equivalents, this changes a little.  The employer must pay enough into the premium so that the employees share of employee only coverage does NOT exceed 9.5% of their annual household income.  See the chart below to see what 9.5% of different income levels looks like.

 

9.5 percent web version

How do I know what my employee's household income is?

There is no way of telling how much an employee’s spouse makes.  For the sake of the 9.5% premium calculation, we suggest calculating your contribution amount of the employee’s W-2 income and assume the spouse makes $0.  If the spouse does make any type of income the maximum limit of employee contribution increases.  By calculating the contribution amount of the employee’s W-2 you are on the safe side when it comes to the fine.

For final guidance on this law please tax with your account.

Can I purchase individual coverage for my employees with business funds?

If you decide to disband your group coverage and covert to individual policies, you may only use business expenses to pay for the health insurance premiums if a few conditions are met.

  1. Insurance premiums may NOT be subsided by the government.  If your employees qualify for a premium tax credit and purchase a plan through the Public Marketplace, you may not pay for the remaining premium as a business expense.
  2. If your employees individual premium is not subsidized by the government, you may set up a Flex Premium plan.  The Flex Premium plan, offered by TASC, a TPA, enables you to pay the premiums out of business operating.

If you would like more information on how this works, please contact our office and we will be happy to discuss the options with you.  As always, please consult with your accountant or lawyer prior to making any final decisions.

About Optimized Benefits

Optimized Benefits is a Boutique Firm dedicated to providing smart solutions to the small and mid-sized business owners and their Employee Benefits plans
we have a focus on Retirement (401K) and Group Health plans

Contact Us

55 W Wacker Dr 14th Floor
Chicago IL 60601

312 263 1590 X 101

Gene@optbenefits.com

Check out the background of this investment professional on FINRA’s BrokerCheck: http://brokercheck.FINRA.org