Owning a small business is a huge accomplishment and also a burden at the same time. All small business owners know how liberating it can be to break free from the 9-5 and strike it out on your own. It’s truly a sink or swims landscape, but this is appealing to the right kind of entrepreneur.
However, things aren’t all fun and games when it comes to owning a small business. There’s one thing that often gets in the way. Namely, what do small business owners do for health insurance?
When most people get their insurance through an employer, how do you find coverage when you are the employer? What if you only have one employee or just work by yourself? In this guide, we’ll explore what small business owners do to find the right health insurance.
Small Business Health Insurance
Under the Affordable Care Act, it’s required for businesses with 50 or more employees to offer affordable health insurance. If not, the business will need to pay a fee per full-time employee. With over 50% of all Americans getting some kind of health insurance through an employer, this is the most common course of action.
Small business insurance can be expensive for many businesses. Group coverage is almost always ideal for individual plans, and it’s even possible for self-employed workers to get a group plan in some states. Learn more about group health insurance for self-employed individuals.
Healthcare Marketplace
Another common option for small business owners who might not have employees or don’t meet the 50 employee mandate is to find insurance through the healthcare marketplace. This is really popular with freelancers, contract workers, and other sole-proprietors who don’t meet the qualifications for group insurance in their state.
The Healthcare Marketplace is a federally-run market for finding affordable coverage. Depending on your financial status, you might qualify for low-cost coverage or another subsidy. Thanks to the Affordable Care Act, healthcare is a lot more manageable for self-employed small business owners.
Small Business Health Options Program (SHOP)
The Affordable Care Act also includes a program called the Small Business Health Options Program (SHOP). This is run within each state, and it also includes programs through the federal government. By shopping in the SHOP marketplace, small business owners can find insurance designed for businesses with between 1 and 50 employees.
Through SHOP, there are a lot of tax benefits to including an insurance plan for your employees. You can also choose a specific metal plan to fit your needs and your employees’ needs, ensuring you stay within budget.
Private Health Exchange
Finally, many small businesses join what’s known as a private health exchange. These are also sometimes called purchasing alliances. It’s similar to the SHOP marketplace, but it’s private instead of running through the government.
With a private health exchange, you choose a set amount per employee that you’re willing to cover. From there, your employees can choose the tier of plan that best works for them. However, it’s important to note that unlike the SHOP marketplace, there are no tax credits available with a private health exchange.
Finding the Right Small Business Health Insurance
As a small business owner, it can feel intimidating to find the right health insurance. Health insurance traditionally was built with large employers in mind, and small businesses can feel left behind. This is especially true for freelancers and other one-man business operations.
Luckily, times are changing. There are now more options than ever when it comes to finding the right health insurance for your small business. Depending on your budget and the needs of your employees, there’s the perfect out there just waiting to be found.