Embarking on the journey of building a successful business demands dedication and hard work. However, navigating the realm of small business health insurance doesn’t have to be another arduous task. Fortunately, recent healthcare reforms present unique opportunities for small businesses to secure affordable health insurance.
If you are a small business owner with 25 full-time employees or less, paying an average salary less than or equal to $50,000 a year, you might be eligible for a tax credit.* This tax credit, created under the Patient Protection and Affordable Care Act (PPACA), provides a break on the cost of group health insurance for small businesses and tax-exempt organizations.
The federal tax credit reimburses qualifying small businesses for up to 50% of the premiums they pay towards employee medical, vision, and dental insurance. Tax-exempt organizations may qualify for a tax credit of up to 35% of premium expenses.
*In some states, the tax credit only applies to Qualifying Health Plans (QHPs) bought through government exchanges. Other restrictions may apply.
Small businesses with fewer than 10 full-time employees that pay average annual wages of $25,000 or less may qualify for the full credit. The amount of the credit is reduced for companies with more full-time workers and higher wages, until it is phased out entirely for those with 25 or more full-time workers and average annual wages over $50,000.
Because eligibility rules are based in part on the number of full-time employees, not the total number of all employees, businesses that use part-time help may qualify even if they employ more than 25 individuals.
In Tennessee, there are four key types of small business health insurance plans to consider:
- PPO Health Insurance Plans:
- Preferred Provider Organization plans are the most common.
- Claims are paid at the highest level when medical care is obtained from preferred providers on the insurance company’s list.
- HMO Health Insurance Plans:
- Health Maintenance Organization plans offer a broad range of services through an exclusive provider network.
- Participants typically need to choose a primary care physician for most healthcare needs.
- HSA-Qualified Health Insurance Plans:
- Designed for use with Health Savings Accounts (HSAs), these plans are often PPO plans.
- HSAs allow pre-tax savings for future medical expenses.
- Indemnity Health Insurance Plans:
- Indemnity plans empower members to choose their healthcare providers.
- The insurance company reimburses a set portion of total charges.
Tennessee Small Business Resources offer various health insurance coverage options:
- Group Plans: Coverage for 2-50 employees with pre-existing conditions covered.
- Individual Plans: Assorted plans based on medical needs, with look-back periods and elimination riders.
- COBRA: 18-36 months coverage for qualifying events with pre-existing conditions covered.
- HIPAA: Coverage with no expiration, premium assistance available, and pre-existing conditions covered.
Eligibility criteria include guaranteed coverage for group plans, medical underwriting for individual plans, and specific conditions for COBRA and HIPAA options.
Monthly costs vary:
- Group Plans: Depend on employer contribution and insurance company rates.
- Individual Plans: Varied costs with no rate caps.
- COBRA: Ranges from 102% to 150% of group health rates.
- HIPAA: Premiums based on the chosen plan.