Getting a Small Business Health Insurance California can seem daunting, but having coverage is crucial for attracting and retaining employees.
As a small business owner, you have several options for getting health insurance. Here are some of the most frequently asked questions about small business health insurance in California:
Requirements for Small Businesses in California?
California requires businesses with 1+ employees to offer health insurance. You must offer coverage to full-time employees working 30+ hours per week. Businesses with less than 100 employees may qualify for tax credits and other assistance.
Health Insurance Options Available
You can purchase a group health plan, use Covered California SHOP exchange plans, offer employee-sponsored plans, or reimburse employees for individual plans. Most opt for group plans from private insurers or SHOP plans.
How do Shop plans work?
SHOP marketplace plans offer small groups access to health plans similar to individual Covered California plans. You can offer employees a variety of plans to choose from and determine how much you contribute.
What are the costs?
Costs vary widely based on plan chosen, employer contributions, and number of employees. Estimates range from $300-$800 per employee per month. Shop rates and get quotes. Tax credits up to 50% of premiums may apply.
What are the deadlines?
For January 1 coverage, you must enroll during the previous year’s open enrollment period (October 15 to December 15). There are also special enrollment periods for qualifying events.
How do I choose a plan?
Consider plan types (HMO, PPO), monthly premiums, deductibles, copays, covered services, prescription drug coverage, and provider networks. Engage employees for input.
Are there resources to help?
Yes, Covered California has a SHOP calculator, cost estimator, and brokers to help small businesses. The Small Business Majority and agents can also assist with choosing plans.
Can I offer multiple plans?
Yes, offering a choice of plans allows employees to select what works best for their needs. Make sure to offer at least one affordable option meeting minimum requirements.
Do I have to cover part-time or temporary staff?
No, you only need to offer coverage to full-time W-2 employees working 30+ hours per week. You can set eligibility rules, like a 60 or 90-day waiting period.
What are the penalties for non-compliance?
The penalty is $2,000 per full-time employee after the first 30 employees. You must file IRS Form 8928 and Covered California ERS forms. It’s best to comply with requirements.
What is the low-income health insurance in California?
Here are some key details about low-income health insurance options in California:
- Medi-Cal – This is California’s Medicaid program for low-income individuals and families. It is free or very low-cost coverage for those who qualify based on income and household size. Children, pregnant women, seniors, and disabled individuals may qualify.
- Covered California – This is the state’s health insurance marketplace offering subsidized plans for those who qualify based on income. Costs are on a sliding scale based on family income and size. Those below 400% of the federal poverty level may get subsidies.
- County health programs – Some counties in California offer low-cost health services and coverage for low-income uninsured residents in their region. Programs vary by county.
- Community clinics – There are community clinics throughout California that provide primary care on an income-based sliding scale to uninsured and underserved populations.
- California Children’s Services – Provides diagnostic and treatment services, medical case management, and physical/occupational therapy services to children up to 21 with eligible conditions.
- Restricted scope Medi-Cal – Limited health coverage for emergency services, pregnancy-related care, and long-term care. For undocumented and low-income individuals who don’t qualify for full-scope Medi-Cal.
In summary, Medi-Cal provides Medicaid coverage for low-income Californians who qualify. Covered California offers subsidized marketplace plans up to 400% of the poverty level. Counties, clinics, and other programs also serve the low-income uninsured.
What type of health insurance is required in California?
Here are the key requirements for the type of health insurance small businesses must provide in California:
- Must offer an ACA-compliant health plan that meets minimum essential coverage standards.
- At least one Bronze level plan option must be offered that covers 60% of medical costs on average.
- The plans must cover essential health benefits like preventive care, emergency services, prescription drugs, mental health services, etc.
- Cannot place an annual or lifetime dollar limit on essential health benefits.
- Preventive care must be covered at no out-of-pocket cost to employees.
- Out-of-pocket maximums on spending apply ($8,700 for individuals for 2023).
- No pre-existing condition exclusions are allowed.
- Dependent children must be offered coverage up to age 26.
- Uses modified community rating for pricing based on age, location, and family size. Gender and health status cannot affect rates.
- Must meet affordability test so employee portion of premiums does not exceed 9.5% of income.
- Can be provided through a major medical group plan, SHOP marketplace plan, or defined contribution to purchase individual coverage.
In summary, small businesses must offer an ACA-compliant health insurance plan that meets minimum standards for coverage, benefits, and affordability. At least one Bronze level option must be provided.
Do small businesses have to offer health insurance in California?
Yes, small businesses in California with 1 or more employees are required to offer health insurance. Specifically, the law states that businesses must offer health coverage to full-time employees working 30 or more hours per week.
There are some important details about California’s small business health insurance requirements:
- This applies to businesses with 1+ employees
- Must offer coverage to full-time W-2 employees working 30+ hours/week
- This does not apply to part-time, temporary, or contract workers
- Businesses with less than 100 employees may qualify for tax credits and other assistance
- Employees can’t be required to contribute more than 9.5% of income towards premium
- Must provide at least one Bronze plan option that meets minimum requirements
- Can set eligibility waiting period up to 90 days for new employees
- Penalties of $2,000 per full-time employee (after the first 30) apply for non-compliance
So in summary, yes small business owners in California are legally required to offer health insurance options to their regular, full-time staff working over 30 hours per week.
There are affordable options like SHOP plans and assistance available to qualifying small employers. Small businesses need to comply with the state health insurance requirements.
How much does an employer have to pay for health insurance in California?
Here are some key details on how much employers in California need to pay for employee health insurance:
- There is no set percentage or amount. Employers can determine their contribution towards premiums.
- However, at least one Bronze plan option must meet the ACA’s affordability test:
- Affordability test: Employee portion of the premium for self-only coverage cannot exceed 9.5% of their household income.
- If the employee portion is over 9.5%, the coverage is considered unaffordable and the employer may face penalties.
- For employees with income up to 400% of the federal poverty level, employers can use California’s Affordability Percentages which are lower than 9.5%.
- Many small employers contribute 50-100% of the premium for employee-only (single) coverage.
- The average small business contributes about 73% of the premium for individual coverage as of 2022.
- For family plans, employers on average pay 63% of the total premium. Employees pay the remaining 37%.
- Small businesses with 25 or fewer employees may qualify for tax credits to offset the cost.
So in summary, employers decide on contributions but must ensure affordability based on income. Contributing 50-100% for individuals and 63% on average for family coverage is common.
Key Takeaways
- California requires small businesses to offer health insurance to full-time staff
- SHOP plans provide an affordable option with potential tax credits
- Monthly premiums, deductibles, and provider networks differ across plans
- Must enroll during open enrollment for January 1 coverage
- Penalties apply for not offering adequate, affordable coverage
Conclusion
- Research plans, rates, and requirements for your small business
- Consider SHOP plans, group plans, and defined contributions
- Engage employees and allow them to select plans
- Comply with rules to avoid penalties
- Consult experts like SHOP brokers if you need guidance
FAQ About Small Business Health Insurance California
What are the main options for small business health insurance in California?
The main options are SHOP exchange plans, group health plans from private insurers, defined contributions to employees to purchase individual plans, and reimbursing employees for individual plan premiums. Most small businesses choose SHOP or group plans.
When do I need to enroll to get coverage starting January 1st?
To get coverage effective January 1st, you must enroll during the previous year’s open enrollment period which runs from October 15 to December 15.
What is the defined contribution of health insurance?
With defined contribution, you give employees a fixed dollar amount each month to put towards an individual health insurance plan they purchase. The amount is tax-free for employees.
What are the penalties for not offering health insurance?
The penalty is $2,000 annually for each full-time employee after the first 30 employees. You must file IRS and Covered California forms. It’s best to comply with requirements.
Who is eligible for small business health insurance?
You must offer coverage to full-time W-2 employees working 30+ hours per week. You can set eligibility rules, like a 60 or 90-day waiting period for new hires.