If you’re an employer searching for hot new talent for your company, you’ll likely already know that many candidates will be looking for an employer that offers them benefits such as health insurance. While you may not have to provide it by law (if you have fewer than 50 employees), offering health insurance to employees is a great way to boost both engagement and morale, and encourage them to be loyal to your company.
However, there are certain compliance issues surrounding health insurance coverage, and while a payroll and HR provider can certainly enlighten you on them and keep you on the right side of the law, it can be helpful to understand your choices and the laws that apply to them:
5 essential health insurance requirements
- If you have less than 50 full-time employees, you don’t have to provide health insurance
- If you employ more than 50, you may be subject to shared responsibility provisions, and make a payment to the IRS if one or more employees receives a premium tax credit for purchasing individual coverage on the Health Insurance Marketplace
- As an employer, you must provide employees with a summary of benefits and coverage that explains the coverage and cost
- You must report coverage costs of an employer-sponsored group health insurance plan on W-2s
- Health insurance, if provided, must be offered to all eligible employees
Below are some of your health insurance options for 2022 as a small business employer:
QSEHRA – an acronym for ‘Qualified Small Employer Health Reimbursement Arrangement, and pronounced Q-Sara, is a new benefits option benefitting small businesses. It allows small business owners to set aside a sum of money each money that is to be dedicated to employee premiums and medical expenses. The program makes employees responsible for paying their own medical bills or insurance premiums, with their employer later reimbursing them with pre-tax dollars.
ICHRA – standing for‘Individual Coverage Health Reimbursement Arrangement’, this enables employers to provide a monthly tax-free allowance for individual health coverage expenses. Employees can then shop around for insurance outside of an employer’s group health plan or on occasions when an employer doesn’t offer it at all.
Traditional Group Health Insurance – if you’re already a small business employer, you’ll probably be familiar with this coverage, in which businesses work with an insurance company, or use a broker to purchase group health plan coverage for their employees.
Group Coverage HRA – HRAs are employer-funded medical expense reimbursement plans, and they allow businesses to reimburse their employees tax-free for eligible out-of-pocket expenses and health insurance premiums. In many instances, this plan is coupled with a high-deductible health plan, or HDHP.
Association Health Plan – another new plan, this allowsa number of small businesses to combine their purchasing power to buy large group coverage.
Important rule changes to look out for in 2022
Even if your business currently employs less than 50 people, should it expand in the future, this change to health plan cost-sharing limits could affect you. Employer-sponsored health coverage is now not permitted to exceed 9.61% of an employee’s income, in order to satisfy ACA affordability requirements for 2022.
Laws surrounding health insurance
There will always be laws concerning healthcare insurance packages, and it’s important that as an employer, you either make yourself familiar with the ones relevant to you from both a federal and state perspective, or you work with a professional company who can guide you.
Ultimately, working with a payroll service provider can ensure that you understand the ins and outs of health insurance, and enable you to provide it to your employees within the confines of the law.