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Colorado Small Business Health Insurance
Topic: Colorado Small Business Health Insurance
If you are a small business owner in Colorado, you may be eligible for a tax credit that could cover some of the costs you pay for employee bonuses. If you qualify, eHealth can help you get your tax credit and find the small business health insurance plan that is best for you and your employees.
If you own a small business with 25 or fewer full-time employees and pay an average salary of $ 50,000 or less per year, you may be eligible for a tax credit. * This tax credit was created as part of the Patient Protection and Affordable Care Act (PPACA) to give small businesses and tax-exempt organizations a break from the cost of group health insurance for their employees.
The federal tax credit will reimburse qualifying small businesses for up to 50% of the premiums they pay for employee health, vision and dental insurance. Tax-exempt organizations can benefit from a tax credit of up to 35% of premium costs.
* In some states, the tax credit only applies to eligible health plans (QHP) purchased through government grants. Other restrictions may apply.
Small businesses with fewer than 10 full-time employees who pay a median annual salary of $ 25,000 or less may qualify for the full credit. The amount of the credit is reduced for companies with more full-time workers and higher wages, until it is completely eliminated for those with 25 or more full-time workers and an average annual salary above $ 50,000.
Since the eligibility rules are based in part on the number of full-time employees and not the total number of all employees, companies that use part-time assistance may be eligible even if they employ more than 25 people.
Colorado Small Business Health Insurance Options
When evaluating health insurance options for your small business in Colorado, you should immediately compare the costs and benefits of the following three options:
- Provide traditional health insurance coverage for small businesses,
- Offer a defined contribution health care plan that reimburses employees for individual health insurance coverage and offers nothing
Colorado Small Business Health Insurance Overview and Types
Individual health insurance
Individual health insurance plans are health insurance plans purchased by people to cover themselves or their families. Anyone can buy individual health insurance. Small business owners who cannot offer group coverage due to minimum contribution (or minimum participation) requirements generally purchase individual and family plans for themselves and their families. In 2014, insurance companies will no longer be able to deny individuals individual health insurance based on a pre-existing medical condition. In addition, starting in 2014, new special tax incentives are offered to companies and employees when employees purchase individual health insurance. In some cases, the self-employed who buy their own health insurance can deduct the cost from their monthly premiums. When small businesses decide the individual health insurance path, they often create a “pure” defined contribution health plan to reimburse employees tax-free for individual premiums.
Group health insurance
Group health insurance plans are a form of employer-funded health coverage. Costs are generally shared between employer and employee, and coverage can also be extended to dependents. In some states, the self-employed without other employees may be eligible for group health insurance plans.
PPO health insurance plans
PPO or “Preferred Provider Organization” plans are the most common. Employees covered by a PPO plan must obtain medical care from doctors or hospitals on the insurance company’s preferred provider list to ensure claims are paid at the highest level.
HMO health insurance plans
HMO stands for “Health Maintenance Organization.” HMO plans offer a wide range of health care services through a network of providers that either contract exclusively with the HMO or agree to provide services to members. Employees participating in HMO plans will generally be required to select a Primary Care Physician (“PCP”) to provide most of their medical care and refer them to HMO specialists as needed.
HSA Qualified Health Insurance Plans
HSA-qualified plans are usually PPO plans specifically designed for use with health savings accounts (HSAs). An HSA is a special bank account that saves participants money, before taxes, that will be used specifically for future medical bills. Section 105 Health Care Reimbursement Plans (HRPs) are often used in place of HSAs because of their benefits to employers.
Compensation health insurance plans
Compensation plans allow members to manage their own health care and generally see any doctor or hospital. Then the insurance company pays a fixed portion of the total costs. Employees may be required to pay for certain services in advance and then request reimbursement from the insurance company.
Colorado Health Insurance Coverage:
- Group Plans: There is a 6 month / 12 month maximum retrospective exclusion period for pre-existing conditions for enrollees who have no prior coverage. Benefits will vary depending on the plan chosen. Covered Preexisting Health Issues.
- Individual plans: varied plans according to medical needs. There is a maximum lookback period of 60 months and a maximum exclusion period of 24 months for pre-existing conditions for registrants who do not have prior coverage. Elimination riders are allowed. Limits may apply to pre-existing health conditions.
- COBRA: Coverage available from 18 to 36 months depending on qualifying events. The benefits are what you had with your former employer. Covered Preexisting Health Issues.
- HIPAA: Benefits are based on the selected program. There is no expiration of coverage. Covered Preexisting Health Issues.
- HIPAA: Assistance for the premium paid by employer sponsored insurance or available Cobra premium. Covered Preexisting Health Issues.
Eligibility for Colorado Health Insurance:
- Group plans: guaranteed coverage for companies with 2 to 50 employees. Eligible employees must work on least 30 hours per week. The owner can be counted as an employee. The owner’s name on the business license is what derives the business wages.
- Individual Plans: Eligibility is subject to medical underwriting. If you’re denied coverage for a medical condition, you’ll be eligible for AHIP or PCIP.
- COBRA: Guaranteed coverage available to employees working for companies with 20 or more employees. Employees have 60 days from the termination date to register.
- HIPAA: You must have had 18 months of continuous coverage and have completely exhausted Cobra or state continuation coverage. You must not have lost coverage due to fraud or non-payment of premiums. You have 63 days to register.
- HIPAA: You must be eligible for Medicaid and have access to employer-sponsored or Cobra insurance.
Colorado Health Insurance Monthly Cost:
- Group plans: costs depend on employer contribution and + 20% insurance company rate.
- Individual Plans: Costs for individual coverage vary. There is no rate limit.
- COBRA: Costs range from 102% to 150% of group health rates.
- HIPAA: Premiums will depend on the plan chosen.
- HIPAA: reimburses the full amount of your employer-sponsored insurance premium by check each month. Pay directly to the insurance company for people with COBRA or qualifying small businesses.
Below is a list of key ACA elements to consider when choosing small business health insurance.
Tax subsidies for individual health insurance
As of 2014, individuals will have access to tax subsidies to purchase private health insurance through the public stock exchange. These grants will be for those who sign up for a currency exchange plan. The subsidy limits individual health insurance costs to 2% – 9.5% of your household income if your household income is less than 400% above the federal poverty line. This works out to about $ 90,000 a year for a family of four.
Tax penalties for individual health insurance.
The individual mandate requires most people to purchase health insurance or pay the penalty on their tax return each year. The individual sanction intends to reduce the effect of “Free Riding” on the health insurance market (a stowaway is a healthy person who does not buy health insurance until he does so.
Small Business Health Insurance Tax Credits
Small businesses with up to 25 full-time equivalent employees may be eligible for a tax credit to provide health benefits to employees. The credit is divided into two phases. Phase 1 (2010-2013) includes a decrease worth up to 35% of small business insurance costs. Phase 2 (2014 and later) includes a tax credit of up to 50% of small business health insurance costs.
Tax penalties for small business health insurance
As of January 1, 2015, employers with 50 or more full-time equivalents that do not offer minimum essential coverage can face monthly penalties if at least one employee uses a premium tax credit to obtain health insurance from the company. Public health grant. If you do not have more than 50 employees, you are not subject to these penalties.
The Future of Small Business Health Insurance: Defined Contribution Plans
Defined contribution plans allow employers to provide health benefits without offering a traditional group health insurance plan. Instead of paying the costs of a specific group health plan, employers give their employees tax-deductible monthly allowances to spend on private health insurance and other tax-free medical expenses.
The characteristics of defined contribution plans are as follows:
- Employee Choice – Employees choose the health insurance plan that best meets their needs.
- Fixed cost: Employers control health care costs by assigning fixed monthly allowances to their employees.
- Savings: Employers using defined contribution plans generally cost less than group health plans, resulting in savings for both employer and employee.
Next steps: evaluate your top 3 options
Immediately compare the prices and benefits of the subsequent three options:
- Provide traditional health insurance coverage for small businesses.
- Provide a defined contribution health care plan that reimburses employees for individual health insurance coverage, and
- Don’t offer anything.