The Pros And Cons Of Small Group Health Insurance Plans
While theres a lot to love about small group health insurance plans for Texas small businesses, there are a few drawbacks, too. Lets check out the pros and cons.
Pros
- Tax-deductible contributions
- The ability to reduce employee turnover and build a stronger brand
- If you have fewer than 25 employees, you could save even more with a tax credit.
- You can set up an HSA for your employees with these insurance plans.
- You can buy into a plan whenever it works for you, rather than having to deal with enrollment periods like those found on the individual market.
Cons
- Sometimes individual plans will be more affordable, particularly for low-income employees who qualify for an incentive on the exchange.
- Your employees will have fewer choices when it comes to customizing their healthcare coverage.
So, there you have it. Small group health insurance plans are the most popular option for small businesses in Texas, and they can offer quite a few benefits. However, theyre not perfect and theyre not the right solution for all situations. Now lets explore HRAs and what you need to know about them.
What Does Small Business Insurance Cover In Texas
There are a few things your business liability insurance can cover, depending on your policy type and needs. Starting off, most Texas small businesses may need a professional liability policy or general liability policy.
If you plan to use vehicles for your business, you will need more coverage than just your auto policy via a commercial auto policy.
General Liability Insurance
Also known as Commercial General Liability , it protects your business from third party claims, another person or businesss claims of bodily injury, associated medical costs, property damage claims, and against personal and advertising injury.
Below are some Texas business insurance coverages you can find in a policy:
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Bodily injury: One of your customers comes to look at your booth and stumbles over some wires that an event planner left out. The customer’s medical expenses, paid for by your liability insurance, might be covered under the policy.
- Property damage and data loss: Suppose a consultant spills coffee on a programmer’s server, causing damage. General liability insurance coverage could cover the subsequent claim up to the policy limits.
- Personal injury: A barber is overheard talking badly about one of the shop’s clients on his lunch break to other customers. The client who was slandered sues the salon for defamation. A general liability policy might cover defense costs and any settlement or judgment.
Professional Liability or E& O insurance
Workers Compensation
Business Owners Policy
What Small Business Benefits Are Required
There are several employee benefits noted by the SBA most employers typically must provide:
- Unemployment Insurance: Texas employers pay state and federal unemployment insurance taxes if specific labor requirements are met. Youll need to be registered with the Texas Workforce Commission if youre required to pay the state unemployment insurance taxes.
- Family and Medical Leave : Private companies with 50 or more employees are required to provide FMLA benefits to protect their jobs if the employee needs to take up to 12 weeks of unpaid leave for specific medical or family situations over a 12-month period.
- Matching Social Security Taxes: Taxes withheld from employees paychecks fund benefits like retirement, disability, and Medicare. Your small business is required to match the pay at the same rate of Social Security taxes as each employee.
- Workers Compensation: You will most likely need to enroll in either a commercial, state, or self-insured workers compensation insurance policy. Texas regulates its own workers compensation laws, but some businesses may be exempt from certain types of coverage. Check with your state to confirm your requirements.
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What Is A Health Savings Account
A Health Savings Account is like a regular savings account except that it allows you to save pre-tax income for health related purposes only. In order to qualify for a health savings account, you must already be covered under a high-deductible plan that will cover your medical costs if they are very expensive and you cannot pay them . A health savings account is beneficial as it allows the consumer to be in control of their own money and choose how to spend it, as opposed to letting the insurance company decide how to spend it.
Can I Buy Small Business Insurance Online In Texas
Yes, you can buy insurance for your small company instantly online in Texas from most companies. Most of the top A-rated companies have an application process that is 100% online where you can get quotes, apply for coverage, and make payments, all without speaking to a licensed agent.
Here’s how:
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How Much Texas Liability Insurance Should You Carry
Most small businesses in Texas will probably only need between $500,000 to $1 million in coverage. However, each situation is unique, but as a general guideline, the type of business you operate or products you manufacture should determine how much Texas commercial general liability insurance you need.
THE SIMPLY INSURANCE WAY
or at their physical address:
TX Department of Insurance333 GuadalupeAustin, TX 78701
For more information about the Texas Department of Insurance, you can visit their website at: https://www.tdi.texas.gov/general/contactus.html
What Is A High Deductible Health Plan
HDHP health plans are a risk unless youre comfortable paying a large amount out-of-pocket in the event of medical care. Generally HDHP health insurance plans:
- Have a high deductible. Your plan only starts paying out once youve personally contributed at least $1,300 for your care
- The high personal cost of treatment makes regular health issues or doctors visits very costly
- An HDHP can be structured as either an HMO or PPO with many of the same features, but with the addition of a high deductible
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For the purposes of health insurance coverage, a small business is generally considered an employer that has one to 50 employees, not counting the owner and their spouse or family members. However, some states and private companies include businesses with one to 100 employees in their definition of a small business. You can use the Small Business Health Insurance Options Program to find ACA-compliant group plans, which you can offer to employees by purchasing coverage with help from an agent or broker. A SHOP plan is the only way to qualify for the Small Business Health Care Tax Credit if you meet the eligibility requirements. If you cant find a plan on the SHOP marketplace, you can find one directly through insurance company websites.
Modern Insurance Companies Serving Small Businesses In Texas
Just because a few big-name insurance carriers dominate the small business health insurance market in Texas doesnt mean they are your only options. Newer insurers are challenging the status quo by building health plans for small businesses instead of catering to enterprises and treating small groups as an afterthought like the big-name carriers do.
These modern insurance companies are leading the way in level-funded health plans, which are the most cost-effective option for small businesses. With level-funding, small businesses only have to pay for the healthcare used by their employees, plus a fee to the insurer for handling administration. For a relatively healthy employee population, this is a far more cost-effective option than paying high monthly premiums for healthcare that goes unused. And if employee healthcare costs ever go higher than a certain level, the employer is protected by stop-loss insurance.
While there are several innovative insurance companies making waves in the industry such as Sana, Oscar Health, Collective Health, Friday, and Centivo not all are available in Texas.
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Texas Large Group Health Insurance Plans
Eighty-three percent of workers in Texas are employed by a business that offers health insurance, and 76 percent have a choice of more than one plan. Of the employer-sponsored plans, 61 percent are self-funded, which exempts those employers from complying with Texas requirement for coverage that exceeds the ACA essential benefits provisions. In a self-funded plan, an employer forgoes using an insurer and sets aside money to pay for employees medical care, usually in a trust and administered by a third party. The approach is more common in large companies, which can spread risk through a wider employee population. The 39 percent that are fully insured must cover these services in addition to the ACA benefits:
- Pediatric Services
- Prescription Drugs
- Reconstructive Surgery following mastectomy
- Transplant Donor Coverage
Although Texas large companies pay almost eighty percent of the single coverage premiums charged to their workers, the average employee still pays 8.7 percent of median income as their contribution.
Is Buying Texas Small Business Health Insurance Online A Good Idea
Purchasing Texas small business health insurance is a complex process and requires substantial knowledge of many issues. Online stores are generally automated to handle huge numbers of transactions, and therefore will try to simplify the choice for you, which may be very helpful. On the other hand, especially if this is your first time purchasing Texas health insurance, online stores may make you feel more like a number than like a client. This is especially true if you have unique medical needs, substantial preexisting conditions, or a complicated medical history.
If this is the case, see if the website has a phone number and try calling it. Ask the operator your questions and only purchase from them if you are pleased with their service.
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Small Business Health Insurance Options
Thanks to the ACA, small business owners can buy health insurance for their employees through approved insurance companies with the Small Business Health Options Program . Getting insurance through the SHOP Marketplace allows employers to offer health plans from multiple insurance companies and qualifies them for the Small Business Health Care Tax Credit, which can help with the cost of providing coverage.
Your business must meet these requirements to qualify for the SHOP tax credit:
- Fewer than 25 full-time equivalent employees
- Average employee salary is about $56,000 per year or less
- Pay at least 50% of your full-time employees premium costs
- Offer SHOP coverage to all full-time employees
Small business owners can also work with a health insurance broker who conducts all plan research and comparisons to find the best plan for your business at no additional charge.
Group plans for small businesses are organized by metal tiers:
Each tier features different premiums, deductibles, copays and out-of-pocket limits, catering to people who prefer to pay higher monthly premiums for more extensive coverage and those whod rather pay a lower monthly premium and risk higher coverage costs in the event that they need to seek care. Employers have flexibility in which type of plans they choose to offer their employees.
Small Group Strategy #: Health Reimbursement Arrangement
HRAs enable you to reimburse your employees for the cost of their individual health insurance, tax-free.
In this situation, you let your employees choose the plan that works best for them and then you reimburse them for a portion of the costs of that plan. Most employers choose to use that reimbursement to cover their plan premiums, but there are other options, including using them for dental insurance, covering out-of-pocket costs, vision insurance, and more.
The primary benefit of an HRA is that it can be incredibly flexible. Whereas small group health insurance plans lock employees into a very rigid structure with little ability to customize their care, HRAs offer the opposite. Employees can choose a plan that offers precisely the coverage they want and need, and each employee can customize their health insurance.
That flexibility carries over to the employer, too. For instance, as a Texas small business owner, you get to decide how much to contribute each month and you dont have to be concerned about unexpected cost fluctuations.
Both employers and employees appreciate HRAs for what they do best allow individuals to customize their coverage while saving money and preventing them from being locked into a rigid plan that doesnt meet their needs.
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Do Small Businesses Have To Provide Health Insurance
No employer is required to offer health coverage for its employees, but companies with at least 50 employees that do not offer health coverage are subject to the Employer Shared Responsibility Payment. If you choose to offer health insurance coverage to your full-time employees, you must offer it to all full-time employees once they become eligible, and there is a 90-day maximum waiting period.
How Much Does Group Health Insurance Cost For Small Businesses
The average annual cost of health insurance for small business owners is $6,589 per employee and employees pick up an average $1,244, according to Kaiser Family Foundations 2021 Employer Health Benefits Survey.
Small businesses pay less for health maintenance organization plans than other types of health plans. Kaiser Family Foundation found small companies pay an annual average of $6,060 for HMO single coverage compared to $6,910 for a preferred provider organization plan.
The Kaiser Family Foundation added that small companies are more likely to pay all employee premiums than larger companies. The report said 29% of covered workers in small firms dont pay premiums for single coverage for health insurance. Thats compared to just 5% in large firms.
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Best Small Business Health Insurance In Texas
Do you know of the top Small business health insurance in Texas? Worry no more, this article brings to light everything you should know about Small business health insurance in Texas.
Health insurance is a type of insurance that helps pay for an insured persons medical and surgical expenses. It is insurance that covers all or part of the risk of a person incurring medical expenses.
The Health Insurance Association of America defines health insurance as coverage. Health insurance can cover a limited or broad range of medical treatments, and it can pay for all or part of the price of individual services.
As with other types of insurance, there is a risk for many people. Depending on the type of health insurance coverage a person has, the insured pays out of their pocket and is reimbursed, or the insurer pays directly to the provider.
A routine finance structure, such as a monthly premium or payroll tax, can be developed by an insurer, to provide the money to pay for the health care benefits specified in the insurance agreement by estimating the overall risk of health risk and health system expenses over the reserve funds. The benefit is managed by a central organization, which could be a government agency or a private company.
Best Small Business Health Insurance: Aetna
Aetna operates nationwide through a reasonably large network of health providers.
This national network gives Aetna an advantage over regionally focused health insurance companies like Humana and Kaiser Permanente, while being competitive on price.
Aetnas health plans offer value for money, with good health coverage across their plans with reasonable premiums and deductibles.
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Small Business Health Insurance Tax Credits
Small businesses with up to 25 full-time equivalent employees may qualify for a tax credit for offering employee health benefits. The credit is broken in to two phases. Phase 1 includes a tax credit worth up to 35% of a small businesss health insurance costs. Phase 2 includes a tax credit up to 50% of a small businesss health insurance costs.
Individual Health Insurance Tax Subsidies
Beginning 2014, individuals will have access to tax subsidies to buy private health insurance through the public exchange. These subsidies will be for those who enroll in a silver plan through the exchange. The subsidy caps the cost of individual health insurance at 2% – 9.5% of their household income if their household income is less than 400% above the federal poverty line. This equates to roughly $90,000 per year for a family of four.
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What Does Business Insurance Not Cover In Texas
Standard commercial property insurance does not often cover losses sustained in certain circumstances, such as floods and other significant weather incidents. Customers’ belongings kept at your company are also affected by this.
Standard professional liability coverage typically does not cover things like deliberate and intentional actions.
Standard liability insurance does not cover automobile accidents for that, you’ll need commercial auto coverage. Traditional plans do not provide comprehensive protection, but it is feasible to add coverage riders to cover the increased hazard.
Custom Health Plans For Small Businesses
To meet the ACAs requirements and keep your small businesss health insurance costs affordable, you have to understand your options completely. Otherwise, you may not be taking full advantage of the options available to you in the new insurance climate created by the ACA. The potential tax benefits alone are worth starting the conversation with an insurance specialist.
Certainly, the ACA presents small businesses with many challenges. To find the right answers, you need to have a thorough understanding of where you have opportunities to use the ACAs provisions to your advantage. If you would like to learn more, please see our Group Insurance Frequently Asked Questions section.
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