Group Health Insurance is a key benefit aimed at helping your employees pay for medical care.
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What is Group Health Insurance for building design professionals?
Group Health Insurance is an employer-provided benefit that helps your employees pay for medical care. It’s a key benefit that can make your building design firm more attractive to employees and help you save on taxes. Of all employee benefits, Group Health Insurance is the most sought after by workers.
The premiums for Group Health Insurance are paid for by company funds and often in combination with money withheld from employees’ paychecks. When an employee or anyone covered by the health insurance needs medical care, the insurance company will help cover it.
How does my building design business qualify for Group Health Insurance?
Most states require businesses to have at least two people (including the owner or founder) to form a group for Group Health Insurance, while a few states permit single-person companies to purchase Group Health Insurance. Most states require 70% of the group to be enrolled in the Group Health Insurance plan or be covered by another source such as individual health insurance, Medicare, and spouse’s health insurance.
Is a Group Health Insurance plan required for every building design business?
It’s required by law for companies with 50 or more employees to offer an approved Group Health Insurance plan to eligible employees and their families. Companies are also required to offer employees affordable plans and file IRS forms 1094-C and 1095-C to report their compliance. If your company has less than 50 employees, your company is not required to offer Group Health Insurance.
Why should my building design business offer Group Health Insurance?
Even though offering Group Health Insurance is not required for every business, you may still want to offer this benefit for several important reasons.
Recruiting and Retaining Talent
Surveys show that Group Health Insurance is the most popular benefit for employees. As potential employees compare the benefits packages of competing firms, Group Health Insurance will be one of the key benefits they are evaluating. Along with the types of health coverage your company offers, potential employees will also be looking at how much of the health coverage the company subsidizes, plan options, spouse and dependent coverage, and more. Health care is an important component of your benefits package that will help to attract new recruits and retain existing employees.
- You are an architectural firm trying to recruit a promising new graduate from the premier architecture graduate program in the state. She chooses to join your firm after comparing the reputation, training opportunities, compensation, and the benefits package (with Group Health Insurance as the centerpiece) of several companies.
There are important tax benefits when you offer Group Health Insurance. The premiums your business pays for Group Health Insurance can be counted as a business expense, which means it would be a deduction on your company’s income taxes. Employees also use pre-tax dollars to pay the premium for Group Health Insurance. This means lower taxable income for your employees and lower payroll taxes for your company.
Your company may qualify for a small business health care tax credit of up to 50% of premiums paid if your company meets these criteria:
- Your business covers at least 50% of your employees’ premium costs.
- You have fewer than 25 full-time equivalent employees with an average annual salary of under $50,000 per year.
- As a business owner, you purchase your own health insurance coverage through the same plan that your employees use.
Purchasing Group Health Insurance
Your business can purchase Group Health Insurance through two major sources: an insurance broker or agent, or a professional employer organization (PEO).
Insurance Agents and Brokers
Insurance brokers and agents can advise you on the different options in the marketplace and help you complete the paperwork and other steps of setting up Group Health Insurance. Brokers and agents are usually compensated by commission and sometimes other fees.
Professional Employer Organization (PEO)
Your company can also choose to outsource the administration of employee benefits to a professional employer organization (PEO). On average, your company will pay the equivalent of 2% of an employee’s payroll to use PEO services. PEOs may be able to offer savings on your Group Health Insurance plan by pooling together employees from multiple companies to form a larger group. Examples of PEOs include ADP, TriNet, and Justworks.
Costs of Group Health Insurance
As a company, you are not obligated to pay the premiums for any Group Health Insurance plan you set up for your employees. However, you may face penalties under the Affordable Care Act if you do not offer plans that are affordable to employees, which is defined as less than 9.5% of a full-time employee’s salary for single coverage.
The Kaiser Family Foundation reports in 2019:
- Average cost of single coverage: $7,188 per year
- Average employer contribution: $5,946 per year
- Average employee contribution: $1,242 per year
- Average cost of family coverage: $20,576 per year
- Average employee contribution: $14,561 per year
- Average employee contribution: $6,015 per year
Factors Affecting Cost
Your premiums will be determined by a number of factors, including the type of Group Health Insurance you offer to employees, your location, and size of company.
Benefits options and type of plan are the key factors that will influence the cost of your Group Health Insurance. For example, Preferred Provider Organization (PPO) plans that provide more benefits will cost more than Health Maintenance Organization (HMO) plans, which have smaller networks. Plans with higher copays, deductibles, co-insurance, and out-of-pocket expenses will lower premiums but put more of a financial burden on your employees when they need medical care.
- The engineers and support staff at your engineering firm are petitioning for more robust health benefits, as your company currently only offers a Group Health Insurance plan with high deductibles and high copays.
Another important factor impacting cost is how much of the premiums your company will subsidize for your employees. For example, employers can:
- Cover a percentage of the premiums, usually ranging from 50-100%
- Cover a portion of the employee’s premiums but not pay for family coverage
- Pay a flat dollar amount for coverage and leave the employees responsible for anything beyond that fixed amount
Your company also makes a choice on who can be covered by the insurance plan: just the employee, the employee and spouse, or employee and family. Providing coverage to spouses and families may cost more if you help pay the premium, but it can help attract and retain talented workers with families.
- You are a small architectural firm that offers Group Health Insurance to employees but not their spouses. When an architect you’ve offered a job to finds out that his wife would not be covered by the Group Health Insurance plan your company offers, he decides to turn down your job offer.
Finally, you can also choose to cover only full-time employees or part-time employees as well. Many companies only cover full-time employees working 30 hours a week or more.
For your building design firm, Group Health Insurance benefits play an important role in attracting and retaining talented professionals. Your firm typically needs at least two people to qualify for Group Health Insurance, and companies with more than 50 people are required by law to carry it. There are a variety of different types of Health Insurance plans your company can choose from, with different costs for employers and employees and different benefits. Most employees today are expecting your company to help them pay for medical care, and choosing the right health insurance offerings will show them that your company is willing to provide a comprehensive benefits package.