There are a few common questions that small business owners are often asking themselves or relevant professionals, and one of the single most frequent comes in the realm of employee health insurance. The question, in some form or another: Are small businesses required to provide health insurance to their employees?
At Nielsen Benefits Group, we’re here to assist a huge range of businesses around Sandy and other parts of Utah with all their employee insurance, employee benefits and group insurance needs, including small and medium-sized businesses (companies that have 99 or fewer employees). In this two-part blog series, we’ll go over everything small business owners should know about offering health insurance, including whether it’s required, some of the specifics here, and some general benefits of doing so even if you’re not legally required to.
Defining Small Businesses
For the purposes of health insurance requirements, small businesses are generally classified as any business with fewer than 50 full-time employees. This is the legal limit that’s most important to consider.
If your business has fewer than 50 full-time employees, it’s considered not to be an ALE – an applicable large employer. This is determined based on your average of full-time employees during the past calendar year, and this is relevant for almost all forms of insurance.
Calculating Full-Time and Part-Time Employees, Plus Equivalents
One important part of this calculation is understanding which employees are considered “full-time” and which are not. For insurance purposes, a full-time employee is anyone who works at least 30 hours per week, or 130 hours per month.
In addition, there’s also such a thing as full-time equivalent (FTE) employees. These are part-time employees whose combined working hours equal one full-time employee. For instance, if you have four part-time employees who each work 15 hours per week, this equates to one FTE employee.
Requirements for Small Businesses
So, are small businesses required to provide health insurance to their employees? The short answer is no – under the Affordable Care Act (ACA), there isn’t a mandate for small business owners whose companies do not qualify as ALEs to offer health insurance to employees. However, there are still some aspects of the ACA that do apply to small businesses. These include:
- Providing a summary of benefits and coverage (SBC) form to your employees
- Reporting any employee healthcare information on their W-2 forms
- Fulfilling other notice requirements for your employees
In part two of our series, we’ll look at some of the potential benefits of providing health insurance even if you’re not legally required to do so, plus go over various plan structures and other important details for small business owners.
At Nielsen Benefits Group, we’re committed to helping small business owners make the best decisions for their companies and employees. Look out for part two of our series, or contact us today to learn more about any of our group insurance services.
