In any small business, your employees will be your greatest asset, particularly if you want to be successful. Health insurance is, therefore, critical for recruiting and retaining employees.

While compensation is always an attractive and reassuring factor to many, in today’s self-reflective world where self-care, health, and general physical and mental well-being are becoming increasingly important, curating a culture of care within the workplace is essential.

Continue reading this article for more on small business health insurance and open enrollment in New Jersey.

The Basics of Health Insurance

Small business health insurance gives your employees the peace of mind that they are being taken care of, keeping them healthier and informed while maintaining employee satisfaction, loyalty, and overall productivity.

It can also help you to attract better candidates during recruitment stages, thanks to potential talent knowing that they will be looked after- an attractive attribute in any business.

Having an excellent health insurance and benefits package will set you aside from your competitors and help you retain your industry’s top talent in an increasingly cut-throat climate.

Now that we have established that healthy employees equate to a healthy business, it is essential to do some research as a small business owner. This enables you to take your time to find the coverage that makes the most sense for you as an owner, your business, and your employees.

While the research and actual buying process can sometimes seem long, tedious, and intimidating (particularly when making comparisons), the benefits outweigh any negatives, making it a worthwhile and ultimately beneficial process.

When you own a business, whether it be big or small, there are certain laws that must be adhered to.

For small businesses, health insurance is based on the number of full-time workers currently employed, and to be eligible for business health insurance; all you need is one full-time employee on your payroll.

If you employ 50 or less people full-time, you don’t legally have to purchase coverage. However, once your total of employees reaches 51 or more, you are obliged to offer health care insurance and coverage to all full-time members of staff.

Types of Small Business Health Insurance

Small-group insurance has been the traditional option for many small businesses looking to offer health insurance benefits to their employees; however, this isn’t the only option.

With three main options to pick from, your decision should be based on what works best for you as a business owner, as well as taking your business set-up into consideration.

Small Group Insurance

The most popular of the three options available, it is geared towards businesses that employ less than 50 full staff members and is purchased directly by employers before offering it to their staff.

In fact, all you need to qualify is one employee, but as it is group insurance, it cannot be purchased by individuals and generally requires around 70% participation to be valid.

The cost of the plan is then shared by all those within the group, including the employees as well as the employer.

Small group insurance members then typically receive the insurance at a lower cost as the insurer’s risk is diluted across a group of policyholders, and the group is generally made up of the business employees.

You can sign up for this type of insurance whenever you want, and there is no open enrollment period, meaning that you can enroll at any time of the year as long as you qualify.

It can also be bought directly from most insurance companies, brokers or private exchanges, and once a plan is chosen, the entire group gets the option to accept the coverage or decline it.

HRA

A Health Reimbursement Arrangement (HRA) is a tax-advantaged, affordable alternative to traditional insurance with benefits that include budget control, tax efficiency, and flexible plan design.

As it is an arrangement, as opposed to a conventional account, this coverage option uses reimbursements instead. This means that staff members will pay their medical office or insurance company upfront, and then later submit a claim to get their expenses reimbursed tax-free.

The structure itself is simple, with the employer deciding how much they want to contribute to the arrangement each month.

Once agreed upon, they will provide their staff with information on how the reimbursement arrangement works, and the employees then choose a plan that they feel works best for them.

With HRA, employees also don’t have to recognize income taxes, and reimbursements can be made by employers needing to pay payroll tax.

HRA’s are flexible, meaning that you can sign up for one at any time, and employees can sign up for their plans without waiting for open enrollments when the HRA is new.

Self-Funded

This is when self-insured employers pay for claims themselves, and are also known as self-insured plans.

An option typically used by large corporations, it can also be used by small business owners to control their healthcare spending and, therefore, save on costs. The employer sets up the special fund and sets aside a chosen amount of money to pay out later should an employee make a health claim.

Benefits include a more adaptable and customizable plan for employees, no pre-funding of health coverage, and an exemption from state health insurance premium taxes.

A self-funded plan is also more affordable than its traditional counterpart, and there are fewer regulations, allowing small business owners to customize the plans to their unique needs and requirements as a business.

However, self-funded plans come with higher risks because the responsibility is placed solely on the business for paying out the claims. This means that if a major claim was to be filed, the company could leave themselves open to potential bankruptcy and financial ruin.

Open Enrollment

Employees have the option to change their health insurance plans and medical coverage every year during what is commonly referred to as the open enrollment period.

For small business owners, open enrollment lasts for the duration of one to two weeks and is generally a month before the renewal date of the current policy. Employees can make inquiries regarding other health insurance plans, receive materials, and, upon making a decision, enroll.

Staff members can also sign up for new offerings and add, change or drop dependents during this time, with this new coverage usually lasting for a full year, starting and finishing on a specified date.

To learn more about small business health insurance, contact us today.