What is employer contribution to health insurance

As a small business employer, you may be wondering what your health insurance requirements are. What are the criteria your small business needs to fulfill in order to offer health insurance, and what are your insurance obligations toward your employees?

Continue reading to learn about small business employer health insurance contribution and participation requirements.

Are employers required to offer health insurance?

The provisions of the Affordable Care Act (ACA) determine whether an employer is required to   offer health insurance or not. In most states, small businesses with fewer than 50 full-time or full-time equivalent (FTE) employees have no legal requirement to offer health insurance. But many small business owners do to attract and retain good workers. As a small business owner if you decide to offer medical coverage, you’ll have to meet the following health insurance requirements.

• The health insurance coverage must be offered to all full-time employees. Typically, full-time employees are defined as those who work 30 or more hours per week on average.
• A small business has no obligation to offer health insurance to part-time employees (usually defined as employees who work less than 30 hours per week on average).
• However, if an employer offers insurance to at least one part-time employee, then the small business must offer group coverage to all part-time employees.

What contribution level or premium cost-sharing requirement applies to employers with small businesses?

Group health insurance plans are a form of employer-sponsored coverage. This means that a business is required to share the cost of group health insurance with employees. Typically, this cost-sharing element of health insurance requirements refers to a small business splitting monthly premium costs with workers. If you opt for a group health insurance plan, in most states, employers are required to contribute or pay at least 50% of each employee’s health insurance premium, although this may vary, depending upon the state in which your business is located.

Are employers required to offer health insurance to employee dependents?

If you offer group health insurance, you also have to allow plan-eligible employees to cover their dependents.  Dependents include spouses, in some cases unmarried domestic partners, and children. Under the Affordable Care Act, group insurance plans are required to extend coverage to dependent children through age 26, whether or not they live at home. Generally, dependents cannot enroll for coverage unless the employee has enrolled.

However, you aren’t required to contribute to dependents’ health insurance premiums. Nevertheless, in most cases, employees can add qualified dependents to the group health plan coverage, regardless of whether you decide to contribute to dependent premium costs.

What documents are required for an employer to offer group health insurance?

In order to meet health insurance requirements, a small business must provide copies of all relevant legal, tax, and accounting information when applying for group coverage. Employers are required to submit certain forms of documentation, including:

• Proof of business location
• Proof of business type
• Payroll documentation

This standard information is used to verify and authenticate the legitimacy of a small business, and much of it is available through a previous year’s business tax filings. Ensuring that your company provides the right documentation can help streamline the process of meeting the health insurance requirements needed to offer group coverage to your employees. To learn more about small business and group health insurance, refer to the eHealth Checklist.

Although small businesses with fewer than 50 employees are not required to offer health insurance, many do so. Most workers highly value group health coverage and appreciate the offer of group health coverage because it is typically cheaper than individual/family health coverage. There are also benefits for employers: business owners and their families may be able to enroll in a small business group health plan along with the business owner’s non-familial employees. An employer who offers group health insurance may benefit from business tax deductions to help offset some of the cost associated with offering group health insurance.

eHealth’s licensed agents can help you with other questions you may have about employer health insurance requirements and can help you find the right group health plan for your business. You can also quickly find and compare small business health insurance plans with eHealth.

This article is for general information and may not be updated after publication. Consult your own tax, accounting, or legal advisor instead of relying on this article as tax, accounting, or legal advice.

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