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Small-group Health Insurance

What is small-group health insurance?

In most states, small group health insurance is health insurance for small businesses. It’s typically purchased by businesses with 50 or fewer full-time equivalent employees, and it provides medical coverage for the employees and their families.

Small-group Health Plans Regulations

Group health plans are now required to fully comply with Affordable Care Act (ACA) rules that apply to individual and small group health plans.

Insurance companies can’t use a group’s medical history to set premiums for ACA-compliant small group plans. Furthermore, older employees’ health insurance premiums cannot be more than three times those of younger employees. Small-group health insurance plans that are ACA compliant and that meet the law’s requirements must be at one of four metal levels. They must also cover the law’s essential health benefits with no dollar limit on how much the plan will pay for a member’s treatment.

What’s in It for Small Business Employers?

Millions of entrepreneurs devote time, energy, and money to provide health benefits for their employees.

If you think it’s because business owners have no choice but to provide health insurance to their employees, you’d be mistaken. They actually aren’t required by federal law to do so.

The law exempts businesses with fewer than 50 full-time equivalent (FTE) employees from the law’s employer mandate. Employers are not required to provide health insurance to their employees and are not penalized if they purchase subsidized coverage through the exchange.

So why do small businesses go to the trouble of setting up small-group coverage?

Attracting a talented workforce – Employees are drawn to businesses that offer health benefits and are going to be more likely to stay at your business for a longer period of time. It’s much easier for most people to enroll in an employer’s health plan than it is to shop for coverage on their own. Employer contributions to the premiums are an added benefit that employees wouldn’t have if they worked for a company that didn’t offer health benefits.