All You Need to Know About Small Business Health Insurance in Texas
55% of employers with fewer than 100 employees offer health insurance despite it being legally required under the Affordable Care Act for businesses with more than 50 employees. Despite the legal requirements, it’s a massive perk for small businesses looking to attract top talent.
Are you a small business owner in Texas looking to ensure your employees have access to quality health insurance? We’ve got you covered.
This comprehensive guide will break down the ins and outs of obtaining small business health insurance in Texas, from understanding the different types of coverage available to navigating state regulations and more.
With helpful tips and resources tailored just for businesses located in Texas, consider this as your starting place towards ensuring that both you and your employees enjoy peace of mind when it comes to health insurance.
Is Small Business Health Insurance in Texas Mandatory?
It depends on how many employees you have. As mentioned above, under the Affordable Care Act, any employer with more than 50 employees must offer affordable health insurance. This isn’t a Texas law; it’s a federal law.
As part of this mandate, if you offer health insurance, you must offer it to all eligible employees as soon as they become eligible for coverage. This means you can’t discriminate between employees and offer coverage to certain ones without reason. It’s important to note that the eligibility period can’t extend beyond 90 days either.
What qualifies as an “eligible employee?” Typically, in Texas, anybody works for your small business for at least 30 hours a week. They also need to work year-round, so you don’t have to offer Texas health insurance to seasonal employees, for example.
But what if you have less than 50 employees? You’re not required to offer anything and won’t get in legal trouble for not doing so. Still, it’s highly recommended. We’ll jump into the details of why below.
Finally, a law states that you, as the small business owner, don’t legally have to share the cost of health plan premiums. With that in mind, certain insurance companies will require you to pay a part of your employees’ premiums. However, that’s up to the insurance companies.
Benefits of Texas Health Insurance
While you might not be required to offer a group insurance plan or any sort of health plan, doing so greatly benefits your bottom line as a business owner. Don’t believe us? Just check out these four great benefits of investing in small business health insurance in Texas.
Reduces Absenteeism
When employees have access to preventive care and other services through insurance, they are more likely to stay on top of their health, reducing the number of days they will need off due to illness or injury. Additionally, when you help reduce financial strain by providing health insurance, your employees are less likely to take excessive time away from work due to medical-related expenses.
Boosts Productivity
One study found that healthy workers were three times more productive than those with poor health. Simply put, investing in health insurance is great for your employees and your company’s productivity rates. With their basic needs taken care of, they’re able to focus more on favorable working conditions, resulting in higher staff morale and better performance levels.
Attracts Top Talent
What’s the number one job perk employees look for these days? You guessed it. It’s employer-sponsored healthcare. 68% of employees want this as part of their job, and in today’s hiring landscape, you want to offer the best perks to be able to attract top talent.
Provides Tax Credits
Lastly, you can actually receive a tax credit by offering insurance plans for your employees. It’s part of the Small Business Health Care Tax Credit, and it’s worth up to 50% of the total cost you pay for the premiums. You have to meet a few requirements to qualify for this, however.
Namely, this tax credit is specifically designed for employers with fewer than 25 full-time employees. However, if you qualify, it’s a great way to reduce your business tax bill yearly while offering an attractive perk to top talent.
Texas Health Insurance Options
What are your options as you start to search for small business health insurance in Texas? You don’t have to purchase health insurance from specific insurance companies. However, there are two main types of health insurance plans most small business owners opt for in these situations.
Individual Insurance Plan
These are ideal insurance plans for business owners with no employees. For example, let’s say you own a content creation agency. You have a Texas-registered LLC, and you outsource some of your content creation work to freelancers but don’t have full-time employees. In this case, an individual health insurance plan would be ideal for you and your family.
Is this necessary? Not technically, no. However, it’s incredibly important these days. Private health insurance can protect you against financial hardship due to high medical bills. Plus, anyone can apply for individual health insurance.
They’re also a great option for small business owners who cannot meet minimum participation requirements for group coverage or for those who are self-employed. It’s worth noting that individual health insurance benefits can be tax deductible, making out-of-pocket costs even lower.
Furthermore, individual health insurance plans give you control and flexibility over your coverage. With individual health insurance, you can tailor your policy to fit your unique needs and circumstances. As you grow personally and professionally, keeping up with your ever-changing lifestyle is easier.
Group Insurance Plan
If you do have employees, you’ll likely want to look into a group health insurance plan. Group health insurance plans are a fantastic way for employers to provide benefits while staying within budget. By sharing costs between the employer and employee, group health insurance plans are cost-effective and easily accessible.
Furthermore, group health insurance plans often extend coverage to dependents. This means they can look after their loved ones without worrying about costs. All in all, group health insurance plans balance quality and affordability for small business owners.
Types of Texas Health Insurance Plans
Now that you know what kind of health insurance you might need to look for as a business owner in Texas, what are the most popular plans? Again, you can often customize your health plans to fit your coverage needs and budget these days. However, here are four popular types of Texas health insurance plans to consider.
PPO Health Insurance
PPO plans are Preferred Provider Organization plans. They allow employees to visit any doctor or hospital on the insurance company’s list of preferred providers. This ensures that their claims are paid at the highest level.
PPOs are great for business owners because they don’t limit coverage only to certain doctors and hospitals like HMOs do. Plus, PPOs offer various benefits and help small business owners save money. However, the benefits depend on the type of coverage you need and how many employees you have.
Ultimately, PPO health insurance plans provide flexibility, cost savings, and reliability, with little to no risk on the business owner’s part. This makes them an excellent choice in today’s competitive market.
HMO Health Insurance
HMO stands for “Health Maintenance Organization.” HMO plans feature a vast network of contracted providers. This includes primary care physicians (PCPs) who can direct members to HMO specialists for more in-depth care if needed.
Additionally, HMO plans are relatively simple and straightforward. As a business owner, this means fewer headaches and confusion. Forget about navigating coverage and paperwork. HMO health insurance plans offer a solid balance between cost and quality of health care services.
Sure, they’re somewhat less flexible than PPO plans. However, they’re most cost-effective in the long run for you.
HSA-Qualified Health Insurance
HSA refers to the Health Savings Plan. These PPO plans are designed for use with a Health Savings Account. This means participants can save pre-tax money and use it for medical expenses later.
For employers, HSA-qualified plans can be further enhanced using Section 105 Healthcare Reimbursement Plans (HRPs). HRPs provide even more advantages. Among them are increased savings and keeping HSA funds in the employer’s hands. However, keep in mind that the contribution limits are somewhat low.
Short-Term Health Insurance
Finally, you might want to consider short-term health insurance. This is ideal for solo business owners in need of temporary health insurance. It’s also ideal for small business owners who can’t offer health insurance to their employees but want to recommend an affordable option they can purchase on their own.
You can secure up to $2 million of coverage with short-term health plans. They’re designed to cover short-term gaps such as furloughs or job changes. It’s a highly flexible option that offers coverage terms, deductibles, and payment options specific to your individual needs.
Plus, you can get started soon after signing up. Most short-term health insurers will have your policy in compliance within 24 hours. Moreover, short-term health insurance is much more affordable than typical health plans.
The trade-off is that the coverage is short-term, obviously. However, if you’re in good health, it’s a great option for you (and a great one to recommend to employees who might need it).
What About Health Sharing Plans?
You might have heard of another option referred to as a “health sharing plan” or a “health share plan.” With this type of health coverage, members must pay a monthly share. They also pay an annual unshared out-of-pocket amount before the plan covers any associated medical expenses.
The biggest benefit?
Health sharing plans let you opt out of certain services you wouldn’t use, so you save money on your premiums. Furthermore, health share plans offer entry into health care coverage with a basic list of included services which is great if you don’t need all the extras that usually come with traditional health insurance.
However, that doesn’t make them the right option for small business owners or their employees. In fact, they’re not technically health insurance plans at all.
Instead of relying entirely on a health insurance company, health-share plans have members pay for some expenses directly from each other. Though this might sound intriguing, these plans usually don’t cover wellness visits or preventive care.
Members are responsible for funding those with their own money. Additionally, they rarely offer coverage for dental or vision care either. Lastly, remember that health share plans typically come with restrictions on pre-existing conditions. This isn’t currently allowed for regular health insurance plans under the ACA.
Group Health Insurance Brokers in Texas
A group insurance plan is the best option for small business owners looking to cover their employees for a few simple reasons. Firstly, group health insurance policies are usually more cost-effective than individual policies. Group rates offer significant discounts compared to what individual members would pay.
Additionally, group policies provide greater coverage options. These options span from costs such as prescriptions and preventative care to coverage of long-term disabilities. Sounds great, right? It doesn’t stop there.
Finally, group health insurance is much easier to manage than individual plans. There’s no need to assess or process numerous applications when adding new employees. A group policy covers everyone employed by the business owner at one flat rate.
Does this mean you need to find a group health insurance broker immediately? You don’t technically need a broker to purchase group health insurance in Texas. However, we do recommend it. Licensed Health insurance brokers understand the ins and outs of business insurance, including the following:Evaluating independent health insurance providersExpertise in plan underwritingProcessing health insurance claimsEasy online applications
There’s more to it than that. However, you (hopefully) get the point. Working with an experienced broker can make all the difference.
Get a Quote
Ready to explore your options for small business health insurance in Texas? We’re here to help! We have over 60 years of experience serving customers looking for quality health insurance at Custom Health Plans.
To start the process, click here to get a free quote. Or, feel free to contact us to chat about your small business needs and how we can customize a plan to fit them.
