Businesses come in all sizes and with varying numbers of employees. And the classification of “small” businesses and “large” businesses differ widely depending on the agency or purpose.
For example, one source relates that the Affordable Care Act (ACA) identifies small to mid-sized businesses as falling into one of three distinct categories: those businesses with less than 50 employees, those with 50-99 employees, and those with 100 or more.
According to recent statistics from the SBA, small businesses make up 99.9 percent of US businesses and employ 47.1 percent of US employees.
However, the Small Business Administration’s definition of “small businesses” is a bit complicated. For example, the SBA defines small business by firm revenue (ranging from $1 million to over $40 million) and by employment (from 100 to over 1,500 employees), according to the U.S. Census Bureau.
Why is all this important? Because small business employers often struggle with the question of when they should (or can afford to) start offering health insurance to their employees.
And size matters.
BUSINESS GROWTH, CALIFORNIA HEALTH INSURANCE, AND YOU
Out of the small businesses in the U.S. that have staff members, more than 5,000,000 of them only have between 1 and 19 employees.
As an employer, if your business has, say, just 10 employees, you may want to offer health insurance benefits for them even though your company is not required to do so by the ACA. But as a business with just 10 employees, can you realistically afford to start offering health insurance?
Keeping in mind that you will be required to cover at least 50 percent of your worker’s monthly premiums and that these can range from over $7,800 for individuals to more than $22,000 per month for family coverage, can you budget for that?
As a conscientious employer, you certainly want to provide your staff with the very best employee benefits that your company can offer. For example, in addition to health insurance, you will likely want to offer good dental insurance and vision insurance, as well.
You are likely counting on continued business growth that will ease the financial strain of funding your health insurance costs and obligations. And being able to attract quality employees and retain those you already have are key elements to maintaining that business growth. But the prospect of significant upfront costs may also be keeping you from deciding.
At J.C. Lewis, we can help make that decision easier for you.
A brief meeting with one of our licensed staff members will provide you with more than enough knowledge to make an informed decision and choose from the best two or three plans that meet your particular needs.
In fact, the easiest way to find the best California health insurance plans available for your company and employees is to submit a Group Health Plan Quote Proposal. There are no obligations for you, or your company and it only takes a few minutes to fill out the group detail information and submit the proposal request.
LARGE EMPLOYERS, BUSINESS GROWTH, AND CALIFORNIA HEALTH INSURANCE
In the lexicon of the Affordable Care Act, in addition to the categories of small businesses, there are also what are known as “applicable large employers.”
What is an applicable large employer?
According to the website for the Office of Personnel Management (OPM),
“An applicable large employer (ALE) is an employer with an average of at least 50 full-time employees. An applicable large employer may be a single entity or may consist of a group of related entities. If there is a group of related entities, these are referred to as ALE members.”
This is significant since, according to the stipulations of the IRS,
“If an employer has at least 50 full-time employees, including full-time equivalent employees, on average during the prior year, the employer is an ALE for the current calendar year, and is therefore subject to the employer shared responsibility provisions and the employer information reporting provisions.”
As an employer with 50 or more employees, you should be offering health insurance, but it is not required. However, there is a penalty assessed by the IRS of $2,570 per full-time employee minus the first 30 workers.
A simple scenario would be an employer with 50 employees who has chosen not to take on the expense of providing employee health insurance and opts to pay the penalties instead. So, for the 20 employees above the first 30, that employer could be looking at $51,400 in fines.
Most reasonable employers would agree that opting for employee health benefits would be a far more cost-effective and productive choice.
Want to know if your company qualifies as an ALE? The Society for Human Resource Management (SHRM) provides an in-depth resource and an Applicable Large Employer calculator (ALE).
JC LEWIS: WHEN YOU’RE READY TO OFFER YOUR EMPLOYEES HEALTH INSURANCE BENEFITS
At J.C. Lewis Insurance we want to be your insurance partner and we offer quality health insurance plans only from the leading health insurance carriers licensed to do business in the states that we operate in.
We are a family-owned and operated health insurance agency located in Sonoma County, California. As specialists in finding and managing medical insurance plans for large and small businesses, and we are licensed and certified by each insurance carrier we represent.
When you’re shopping for medical insurance for you and your employees you are likely to have several questions and concerns. That’s great because we welcome your questions about health coverage insurance and you can be confident that JC Lewis Insurance Services will help you find the right solution.
What constitutes a "small business" according to California health insurance standards?
In the realm of California health insurance, a “small business” encompasses a broad spectrum, varying based on factors like revenue and employee count. The Affordable Care Act (ACA) delineates small businesses into three categories: those with fewer than 50 employees, those with 50-99 employees, and those with 100 or more. However, definitions may differ between agencies, complicating the classification further.
Why is it important for small businesses to consider offering health insurance benefits?
Offering health insurance benefits can significantly impact a small business’s ability to attract and retain top talent, fostering growth and stability. While not mandated for all small businesses, providing such benefits demonstrates a commitment to employee well-being, enhancing morale and productivity.
What are the financial implications for small businesses considering health insurance coverage?
Budgeting for health insurance coverage can pose challenges for small businesses, particularly those with limited resources. While the ACA may not mandate coverage for businesses with fewer than 50 employees, the costs of premiums, especially for family coverage, can be substantial. Evaluating affordability and long-term sustainability is crucial in making informed decisions.
What role does business growth play in the decision to offer health insurance benefits?
Business growth can influence a company’s ability to shoulder the financial burden of health insurance costs. While initial costs may seem daunting, sustained growth can alleviate the strain over time. Providing attractive benefits like health insurance can also aid in recruitment efforts and employee retention, fueling further expansion.
What options are available for small businesses seeking California health insurance plans?
Small businesses exploring health insurance options in California have several avenues to consider. Consulting with reputable insurance agencies like J.C. Lewis Insurance can provide access to a range of plans tailored to specific business needs and budgetary constraints. Utilizing resources like Group Health Plan Quote Proposals allows for a comprehensive comparison of available options.
What distinguishes "applicable large employers" in the context of health insurance requirements?
Under the ACA, applicable large employers (ALEs) are entities with an average of at least 50 full-time employees. These employers are subject to specific provisions and reporting requirements outlined by the IRS. While offering health insurance is not mandated for all ALEs, penalties may apply for non-compliance, making coverage a prudent choice for most.
What penalties do applicable large employers face for not providing health insurance benefits?
Applicable large employers opting not to provide health insurance coverage may incur penalties imposed by the IRS. The penalty, calculated based on the number of full-time employees, can amount to significant sums. However, investing in employee health benefits typically proves more cost-effective and advantageous for long-term business sustainability.
How can employers determine if their company qualifies as an applicable large employer?
Employers can ascertain their status as an applicable large employer by assessing their average full-time employee count over a designated period. Resources such as calculators provided by organizations like the Society for Human Resource Management (SHRM) offer valuable tools to aid in this determination.
What distinguishes J.C. Lewis Insurance in assisting businesses with health insurance decisions?
J.C. Lewis Insurance stands out as a trusted partner for businesses seeking health insurance solutions in California. With a focus on personalized service and access to top-rated carriers, J.C. Lewis simplifies the process of selecting and managing health insurance plans. Their experienced team ensures businesses receive tailored recommendations aligned with their unique needs and objectives.
How can businesses initiate the process of exploring health insurance options with J.C. Lewis Insurance?
Initiating the process of exploring health insurance options with J.C. Lewis Insurance is straightforward and hassle-free. Businesses can begin by scheduling a consultation with one of their licensed professionals, who will provide expert guidance and insights. Utilizing services like the Group Health Plan Quote Proposal streamlines the selection process, allowing for informed decision-making without any obligations.
