What is a Small Business Health Insurance Plan?

With rising healthcare costs, it’s more important than ever for small businesses to offer their employees health insurance. Many employees look for jobs at companies that offer health benefits, and not offering them can cost your business more in the long run. Fortunately, the Small Business Health Options Program (SHOP) is here to help. SHOP is a healthcare marketplace that allows private insurers to offer group insurance plans to small businesses. This allows you to browse a variety of plans and find a competitive deal.

SHOP Coverage for Employers

The Small Business Health Options Program (SHOP) provides the nation’s smallest businesses with access to affordable and flexible plan options that offer critical health benefits. Private payers sell these plans through SHOP-specific insurance brokers or their own online marketplaces. To qualify for the SHOP exchange, small businesses must contribute a minimum of 50% toward employee health coverage.

Using the SHOP exchange, employers can choose Qualified Health Plans from multiple insurers. They then make one monthly payment to the SHOP exchange, which disperses the funds amongst the selected plans and insurers. This reduces the employer’s administrative costs and allows them to compare costs, benefits, and quality.

The SHOP marketplace offers a variety of plan options, including those that provide a narrow network of “preferred” providers for physician visits and hospital stays. These plans typically have lower copayments and out-of-pocket costs than those with wider networks. In addition, the Affordable Care Act requires that all SHOP plans cover the ten essential benefits. This includes things like emergency services, maternal care, and mental health support. Employers must also consider the size of their workforce when choosing a plan.

SHOP Program Eligibility

Employers that purchase SHOP plans are eligible to claim the Small Business Health Care Tax Credit worth up to 50% of their premium costs (or 35% for non-profits). This credit is only available when a business purchases through the SHOP Marketplace and is offered for two consecutive years.

Businesses can enroll in SHOP-certified plans through an online marketplace, or with the help of a SHOP-registered agent or broker. There are no enrollment limits and SHOP-certified plans can start any time of year. However, employers that offer SHOP plans aren’t required to offer employee coverage and they may be subject to a shared responsibility payment when they don’t offer coverage.

What is S Corp Owners Health Insurance?

S Corporations can offer group health insurance to their employees, and they can deduct those expenses as a business expense. But things get a little complicated when it comes to health coverage for the owners of the company.

The IRS treats S corp shareholders differently than it does rank-and-file employees when it comes to health insurance. If an S corporation provides the owner with insurance, it must report that amount as wages on the shareholder’s Form W-2. The premiums are also subject to Social Security and Medicare taxes, just like any other employee’s wages are.

However, if the S corporation reimburses the more-than-2-percent owner for individual policies purchased on the open market, it may avoid Medicare and Social Security taxes by treating the reimbursement as above-the-line deductions on the shareholder’s personal tax returns. This method can be complex and requires careful planning to make sure the IRS rules are followed. It’s a good idea to consult with a CPA or accountant before proceeding. Getting it wrong could lead to the $100-a-day penalty under the Affordable Care Act

What to Consider When Shopping for a Small Business Health Insurance Plan?

When shopping for a plan, it’s important to consider monthly premiums, deductibles and copays. You also want to make sure your employees’ preferred medical providers are available in the network. Finally, it’s good to know if there are any coverage add-ons you may need to consider, such as vision or dental. Ultimately, the best way to determine which plan is right for your small business is to get a quote. We can help you compare plans and pricing from leading insurers across your state. Just fill out our simple form to get started.