What You Need to Know About Getting Health Insurance for Yourself — and an Employee
Yes, you can get health insurance coverage if you only have one employee (unless that employee is your spouse).
Wondering if you can get group health insurance coverage if you only have one employee? The answer is yes — as long as that employee is not a spouse — and with proof that you are a small business.
Although small businesses are not required to offer health benefits, purchasing group health insurance may allow the owner and staff member to save money on premiums and get better benefits.
Insurers usually offer lower premiums and deductibles for groups — even two-person groups — than they would for an individual. For instance, premiums generally are 7 percent lower per person and deductibles 31 percent lower in group plans compared to individual ones.
Just as importantly, group health insurance can save you and your employee money on taxes.
When an employee needs individual health insurance, they must use post-tax dollars to buy it. But when an employee buys health insurance through a group plan, they pay for the insurance with pre-tax dollars. That can save them up to 30 to 45 percent on their health insurance premiums.
For employers, the tax benefits are many:
- Employer contributions are tax-deductible
- Employer payroll taxes are reduced by 7.65 percent of employee contributions
- Employer workers compensation premiums are reduced
In addition, paying for health benefits instead of higher salaries can save employers money because they don’t pay payroll taxes and workers compensation premiums on money used towards health benefits.
Group health insurance also allows you to ensure that the plan’s coverage and preventive services match the unique risks of your business.
Offering benefits is a great way to entice new employees and keep valued employees, and good health insurance is considered the most important benefit. A survey by Glassdoor, a job and recruiting site, indicated that employees feel that health insurance is, by far, the most important benefit they receive from their employer, followed by vacation, paid time off and a pension, 401(k) or other retirement plan.
In 2015, former president Barack Obama signed into law an amendment to the Affordable Care Act which defines “small employers” as anyone with one to 50 employees. Specifically, a small business usually is defined as having at least one employee, which means the owner of the company and one full-time equivalent employee or common law employee.
According to the Internal Revenue Service, a common law employee is someone who works at least 30 hours per week and is not the owner’s spouse. In addition, the work done by a common-law small business employee and how it’s done must be controlled by the employer — even if the employee is not directly supervised. However, this definition does not include contract employees.
Spouses are not included in the definition of small business employee, but in most cases other family members may count as employees.
If you think you qualify as a small business owner, you must be able to provide proof that yours is a small business. The main way to prove this is to show your annual revenue. Insurance companies will probably also request certain documents, such as:
- Current business license
- Articles of incorporation
- Recent business tax return
If you’re ready to explore the possibility of moving from individual health insurance coverage to group coverage for you and an employee, contact your insurance broker to explore your options.