Small Group Health Insurance Rules – Group health insurance for small businesses with only one employee: how does it work? BY Sydney Garrow Updated October 05, 2022
Small businesses with only one employee are permitted (though not required) to provide health insurance for their employees. But there are some unique requirements for applying for small-scale group health insurance that you should be aware of before applying. The better you understand how many employees you actually have, how small business health insurance works, and what options are available to the smallest entities, the easier it will be to provide quality coverage for everyone in your workplace. Here’s a guide on how to get health insurance for small businesses with one employee.
Small Group Health Insurance Rules
If your business has one employee besides you, several health insurance options are available:
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Group health insurance policies are one of the most common ways to get health insurance for single-employee small businesses, and that’s what many employees expect when they’re told the job comes with health insurance benefits.
HRA is less comprehensive but can be more flexible. You can offer HRA if you want to limit your business expenses. An HRA may also be appropriate if you want to provide some health insurance benefits to employees who already have coverage through their spouse’s or parents’ policies.
Before setting up an HRA, consider a high-deductible group health insurance that allows health savings accounts. An HDHP (high deductible health plan) will have lower premiums and employees can get similar (or better) benefits by linking the policy to an HSA.
Before you learn how a small business can get group insurance for itself and your only employees, you need to make sure that the individual is considered an employee and that you own no one else. There is a strict definition of “employee” that insurance companies use when approving small businesses for group health insurance. So you must own a legitimate small business and your workers must be legitimate employees.
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Make sure your business is legally incorporated, operating under the necessary licenses and regularly paying taxes as required. Small businesses have fewer than 50 employees for health insurance purposes, but that’s not a problem if you only have one.
According to the IRS, someone who works for you is considered a common law small business employee if you can exercise enough control over their work so that they are not classified as a contractor. This is true even if you are not supervising them while they are working. As long as you manage the production process of workers and finished goods, these people are employees of your small business. This definition excludes most contractors because while your business can determine what these people produce for you, by IRS standards, you typically have no control over how they do the work.
Employees must also be legally able to work in the United States and they must be legally employed by your business. Finally, employees must work a minimum of 30 hours per week.
The common law definition of “small business employee” specifically excludes spouses, even if they have a similar role in your business as an employee. So, if you own a business and your spouse is the only one working for you, you probably won’t qualify for small business group health insurance. In most cases, this does not apply to other family members.
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If your business has one employee, group health insurance is available through the Small Business Health Choice Program (SHOP). This government-sponsored program makes small business health insurance plans available to small businesses with fewer than 50 employees.
The SHOP group health insurance program is designed to be simple and flexible. It also qualifies for the small business health care tax credit.
An agent or broker can help you compare the various SHOP plans that provide group health insurance for small businesses with one employee. You can choose a plan that fits your budget, location and the scope your business wants.
Although group health insurance is not the only way to provide health benefits to employees, it is one of the most popular. Providing a group health insurance plan has several benefits for your business and employees, such as:
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Small businesses can purchase health insurance for one employee through a STORE or in the private market. There are many single employee health insurance plans available.
To verify eligibility for group health insurance and enroll in a plan, you need to know basic information about your business and its employees, including:
With this information, you can compare TOKO policies that provide group health insurance for small businesses with one employee. Check premiums, network, coverage and other details when looking at policies that offer small business group health insurance.
For help finding the right small business group health insurance for your business, use eHealth to explore plan options. The easy-to-use eHealth platform gives you access to many SHOP and non-SHOP plans, ensuring you can quickly identify the best health insurance.
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It’s easy to check what your business qualifies for, compare and contrast plan features, and choose which plan you want to go with. So, if you want to provide company health insurance for one employee, the eHealth team is here to help. Implementing Grandfather’s Plan, Health Care Reform, New Consumer Protections and What’s on the National Association of Health Underwriters’ Radar Screen.
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