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How Your Insurance Needs Change As Your Business Grows


For many small businesses looking to retain top-quality staff while maintaining a tight budget, employee benefits are an excellent place to start. You may start your business with only a handful of people. If you have between one and 50 employees, you may be eligible for small business health insurance. But as your organization grows in staff and revenue, you will most likely need to apply for large group coverage. Below, we break down both types of insurance and how each can help you attract new talent and maintain loyalty within your current employees. 

Small Business Health Insurance

Small business health insurance is offered based on a few qualifications. First, there must be one full-time employee (30 hours per week or more) or the part-time equivalent (such as two employees who each work 15 hours per week) enrolled in the plan. This does not include the business owner, their spouse or dependents, or any other business partners. The business must also contribute toward the premiums of their employees. 

Typically on most plans, at least 70% of employees must be enrolled. If a majority of your staff receives individual or group insurance elsewhere, you may not be eligible. While small business health insurance is more expensive for businesses compared to large group plans, there is a significant benefit to offering coverage to your employees. Businesses will receive tax incentives, while also showing staff that they value each individual’s wellbeing.

Large Group Insurance

For companies with more than 50 employees, large group insurance becomes the better option. Unlike for small businesses where premiums are set by the insurance groups, large businesses are able to negotiate and set their preferred group insurance premium. This allows the company’s cost per person to be lower while retaining more flexibility in the coverage options. However, a large business must provide coverage to 95% of their employees or pay a penalty fee to the IRS under the Affordable Care Act. 

Large employers often choose to add technology-driven health benefits such as telemedicine, wellness checks, and wearable fitness trackers to incentivize employees to take ownership over their own health. Studies have shown that these methods help improve overall employee wellness while also reducing both employer and employee premiums over time.

Because large group insurance allows employers to offer more customized health plans and benefits, this can also become a major factor in attracting premier talent. In a 2018 survey conducted by America’s Health Insurance Plans, 46% of respondents said health insurance was either the deciding factor or a positive influence in choosing their current job. Most interestingly, 77% said they looked more favorably upon their employer after learning that 70-80% of their premiums were paid by their employer. 

Overall, offering your staff health insurance benefits is optional, especially for small businesses. While there are no laws in place that require coverage, companies with more than 50 employees may face fines for not offering benefits. By offering insurance even as a small business, you are creating a culture that values its employees and invests in their personal wellness. As your company grows, you may elect to add additional benefits such as telemedicine or behavioral health counseling. All of these benefits will help you become a top employer and retain quality employees. 

To review your business’s health insurance coverage and determine the benefits that are best for you and your employees, speak with your insurance representative today.