A small business is usually identified as one that has between two and 50 employees. If you are running a small business, one of the best ways to attract and retain the best employees is by offering a good benefits package. However, this can sometimes be cost-prohibitive, because you do not have the bargaining power enjoyed by larger companies.
However, small businesses can choose from a large number of group health insurance plans that are marketed specifically to small businesses. This lets you make sure your employees and their families enjoy the benefits of group health insurance, while not overwhelming your budget.
The rules that identify a company as being a “small business” can vary depending on the state where you will be purchasing the group health insurance plan. Before you begin shopping for an insurance plan, check with your state’s business regulation department to see if you qualify as a small business. It’s beneficial if you can qualify as a small business, because the insurance company cannot deny you from receiving small group insurance coverage, if you meet the state’s qualifications. Federal law protects the company from being excluded for coverage in the event that any employees have health issues.
Typical qualification criteria to qualify for a small business insurance plan include:
The company is a legitimate business, as verified by one of the following documents:
- A business license
- Articles of incorporation
- Articles of organization
The company meets the minimum employer contribution percentage required by the insurance company.
The company has at least two full time owners, officers, partners, or employees.
However, some states allow self-employed people to purchase group health insurance plans, defining them as a “group of one.” The premiums for a one-person group are still significantly lower than the premiums for individual health insurance plans. If your state requires a “group” to include at least two employees, you can still qualify for an “association” health insurance plan if you belong to your local Chamber of Commerce or a trade organization.
Your small business health insurance plan should include a tax savings strategy to help maximize your deductions. Combining a tax savings plan will help reduce your costs, but you must first establish a written plan document before your business can take any tax deductions. Some insurance companies will help you create a plan document that complies with government standards, allowing you and your employees to avoid paying tax on the health insurance premiums, as well as flex spending account (FSA) options such as daycare services and out-of-pocket medical expenses.