Group Health Insurance Frequently Asked Questions
Does the ACA Force Small Businesses to Buy Group Health Insurance on the SHOP Marketplace?
No. The ACA does not force small businesses to participate in the SHOP marketplace. Companies are free to buy insurance in the private market, but for a large number of small businesses, the cost of group health insurance premiums remains too high to offer health benefits to new employees. The intent of the SHOP marketplace is to improve access to affordable health care for small-business employers and control the rising cost of group health insurance premiums. However, due to Obamacare changes, many employers are instead seeking Defined-Contribution plans as a more affordable insurance solution. As a small-business owner, you can choose to purchase a custom group health plan that better suits the needs of your employees and the financial realities you face. For instance, if your company lies near the 50-employee threshold - and you plan to expand in the next few years - the SHOP marketplace will do you no good. You will need a more comprehensive solution. Managing the cost of group health insurance for your small business is certainly a huge challenge today. For the foreseeable future, the ACA is the law of the land, so to meet your company's health insurance needs you will need to understand how the law affects small businesses. To determine if a Group Insurance plan is right for you, please see our Group Insurance plans page. There are a variety of plans available that will help you meet your business’s specific financial and benefit level requirements. Contact us today to get expert advice about which group insurance option is best for you, or compare group insurance plans right now to get started.
Which Small Businesses Qualify for Tax Credits in the SHOP Marketplace?
If your company employs less than 25 full-time equivalent employees, you may qualify for premium tax credits under the ACA's small-business provisions. In addition to employing less than 25 full-time workers, the average income of these workers must be less than $50,000. If your small business meets these qualifications, you may be eligible to receive a tax credit, but you can only receive this tax credit via the SHOP marketplace. Companies that choose to insure via the private market will need a different solution to offset costs.
What Is the SHOP Marketplace?
The ACA works by creating a federally regulated health insurance marketplace (i.e., health insurance exchanges) for single individuals, their families, and small businesses. The Small Business Health Options Plans (SHOP) marketplace is the ACA's program that focuses on the health insurance needs of small businesses. However, many small-business owners incorrectly assume that they must buy group health insurance through the SHOP marketplace. As a small business owner, you understand that the high cost of small group health insurance prohibits you from offering health coverage to your employees. The SHOP marketplace's intent is to provide small-business employers with the chance to purchase federally subsidized, low-cost group health insurance. The caveat is that not every small business qualifies for tax credits to offset costs in the SHOP marketplace. This is part of the reason why many small business owners are seeking Defined-Contribution plans as an affordable health care solution for their organizations.
Do All Small Businesses Have to Purchase Group Health Insurance, or Pay a Penalty?
Under the ACA's small-business provisions, companies with 50 full-time employees or less do not have to pay a penalty for not offering group health insurance. The most important fact to remember about the 50-employee threshold is that the ACA defines what constitutes a full-time employee differently than you may assume. The ACA considers a 30-hour work week full-time - not a 40-hour work week, as you might assume. Also, the ACA consolidates the hours of part-time workers into "full-time equivalent employees." So if your company is close to the 50-employee threshold, you should consult with an insurance specialist to make sure you comply with the ACA.