Covering Your Small Business
Helping Employees Access Health Insurance
Good benefits can help recruit and retain employees. Learn more about the health insurance needs of your small business.
Small Group Plans
Businesses with 1-50 employees may provide health insurance for staff and their families through a small group health insurance plan. Employers may purchase a small group health insurance plan directly from an insurance company or from an insurance agent or broker.
Employees may purchase their own individual health insurance plan to cover themselves and their family members. If your employees do not have access to an affordable employer-sponsored health insurance plan, they may be eligible for federal tax credits to help them pay for an individual plan. All employees may shop for an individual plan and determine their eligibility for financial assistance through Washington Healthplanfinder.
Help enrolling in an individual plan is also available through Washington Healthplanfinder’s statewide network of customer support.
Other employee benefit arrangements: Health Reimbursement Arrangements (HRAs) and Health Savings Accounts (HSAs)
An HRA is a vehicle that allows an employer to reimburse medical expenses of employees and their dependents. Generally, HRAs must be 100% funded with employer contributions, integrated with a health insurance plan offered by the employer, and in compliance with ACA rules (e.g., no annual benefit limits). For employees to participate in the HRA, they must also be enrolled in the insurance plan offered by the employer.
An HSA is a tax-favored bank account set up in an employee’s name and collects pre-tax contributions from both the employer and the employee, to be used to pay medical expenses of the employee and their dependents. For employees to participate in the HSA, they must also be enrolled in a qualifying High Deductible Health Plan (HDHP).
A Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) is a special new HRA that can be offered by an employer with fewer than 50 employees. Unlike standard HRAs, a QSEHRA does not have to be paired with a health insurance plan offered by that employer. Businesses offering a QSERHA may not offer a group health plan to any of their employees.
Instead, an employer can set up a QSEHRA and reimburse the medical expenses of their employees, including premiums for health insurance acquired in the individual market. To receive reimbursements, employees must first show proof of their other minimum essential coverage. For 2018, contributions to QSEHRAs are capped at $5,050 annually for employee-only coverage and $10,250 for family coverage.
Employers are cautioned to consider the financial impact a QSEHRA could have on employees’ premium costs. If your employees will be getting health insurance in the individual market, offering a QSEHRA could be detrimental to them. Employees who would be eligible for tax credits through the Exchange will either lose eligibility for tax credits entirely or have their tax credit reduced by the amount of the QSEHRA contribution. For many employees, coverage in the individual market may be more affordable without a QSEHRA, so they can take full advantage of federal tax credits for health insurance coverage.