Contribution Requirements for Small Group Employers
There are some provisions of the Affordable Care Act (ACA) that determine whether an employer is required to offer health insurance or not. In most states, small businesses with fewer than 50 full-time or full-time equivalent (FTE) employees have no legal requirement to offer health insurance. However, many small business owners do offer health insurance to attract and retain good workers. Small business owners who decide to offer medical coverage will have to meet specific requirements.
One requirement includes contribution level or premium cost-sharing. Group health insurance plans are a form of employer-sponsored coverage. This means that a business is required to share the cost of group health insurance with employees. Typically, this cost-sharing element of health insurance requirements refers to a small business splitting monthly premium costs with workers.
When deciding to offer employee health plan coverage, employers should take into consideration that they may be required to contribute at least 50 percent to each employee’s health insurance premium, though this requirement may vary by carrier. Employers may choose to contribute to the employee dependent premium cost as well. If an employer decides to contribute to the employee dependent premium(s), they must offer this to every employee to avoid certain discriminatory practices. However, employers are not obligated to pay the dependents’ premium and can require employees pay the full premium cost for dependents.
In conclusion, employer contributions to the employee premium is great way to encourage more employees to join the plan, retain good employees, and attract new employees.
Contact your ARC representative with any questions you might have about your contribution requirements as an employer.
References:
https://www.ehealthinsurance.com/resources/small-business/employer-health-insurance-requirements
https://healthcoverageguide.org/reference-guide/laws-and-rights/contribution-requirements/