fbpx

Healthcare Insurance Coverage for Business 2021

The pandemic has made everyone acutely aware of the need for healthcare Insurance coverage. Small businesses struggling to survive are challenged to find ways to offer health coverage as a fringe benefit to employees. Premium costs are high.

Nonetheless, there are several ways in which small employers can help employees get coverage for the upcoming year.


5 Things to Know About Healthcare Insurance Coverage in 2021

Don’t wait until the last minute to explore your options. Here are 5 things to keep in mind.

1. Coverage Requirements for ALEs

If you have at least 50 full-time and full-time equivalent employees, you are an Applicable Large Employer (ALE) subject to the employer mandate under the Affordable Care Act. This means you must offer minimum essential health coverage that’s affordable to your full-time employees or pay a penalty. What’s affordable Healthcare Insurance? The IRS has released this information for 2021. The cost to employees can’t be more than 9.83% of household income in 2021.

2. HSAs

Health savings accounts (HSAs) allow individuals to cover their out-of-pocket costs. But to make contributions—whether by employers or employees—to such accounts, individuals must be covered by a high-deductible health plan (HDHP). For 2021, this means insurance with a minimum deductible of $1,400 for self-only coverage or $2,800 for family coverage and a cap on out-of-pocket expenses (deductibles, co-payments, and other amounts other than premiums) not exceeding $7,000 for self-only coverage or $14,000 for family coverage.

If you have group insurance that is an HDHP, then you can decide whether to contribute to employees’ HSAs. If not, then employees can choose to make deductible contributions to their accounts for 2021. More information about HSAs is in IRS Publication 969.


3. HRA Options

Health reimbursement arrangements (HRAs) facilitate tax-free reimbursements to employees. While the business can deduct these reimbursements, they aren’t subject to employment taxes. For 2021, consider these HRA options:

  • Qualified small employer health reimbursement arrangements (QSEHRAs). These plans reimburse employees for premiums on their individually-obtained coverage up to a set dollar limit ($5,250 for self-only coverage or $10,600 for family coverage in 2020).
  • Individual coverage health reimbursement arrangements (ICHRAs). These plans also reimburse employees for their premiums on individually-obtained health coverage. The law doesn’t cap the reimbursement; it’s up to the employer to fix this amount (on a nondiscriminatory basis).
  • Excepted benefit health reimbursement arrangements (EBHRAs). These plans help pay for certain benefits, such as dental or vision care, not otherwise covered by a general insurance policy. Reimbursement is capped up to a set dollar amount. The cap for 2021 has not yet been announced (it was $1,800 for 2020).

More information about HRAs is also in IRS Publication 969.

4. Premium-only Cafeteria Plans

If you don’t provide a Healthcare Insurance plan or do have a plan (including an HRA) but you don’t pay all of the cost, you can enable employees to pay all or the balance of premiums on a pre-tax basis. The plan must offer employees a choice between cash or reimbursement for health insurance coverage. If they choose the coverage, the amount of what they’d pay for premiums that’s withheld from their paycheck is not treated as taxable compensation to them. There are no employment taxes on this benefit. If, however, they choose the cash option, it’s taxable compensation.

5. Notice Requirements

Employers offering a Healthcare Insurance plan are required to give notice to employees about their participation and what’s involved. Depending on the plan, notice may include providing a summary plan document.


Generally, notice is required to be given 90 days before the start of the plan year. So, if the plan year starts on January 1, 2021, notice must be given by October 3, 2020.

Conclusion

Start shopping now for Healthcare Insurance. Contact the Shield Agency expert Carlos Garcia or another tax advisor to find ways to make this benefit available to employees without busting your budget. And be sure that whichever option you use that you do so in compliance with the law.

Shield Insurance Agency Blog

Insurance Companies response to Covid

$5,000 Community Development Grants for GR
Shield Insurance Agency Blog

$5,000 Community Development Grants for GR

Don’t Ignore Open Enrollment
Shield Insurance Agency Blog

Don’t Ignore Open Enrollment

Medicare Choices
Shield Insurance Agency Blog

Medicare Choices

Disappointed with Medicare?
Shield Insurance Agency Blog

Disappointed with Medicare?

Healthcare Premiums Drop
Shield Insurance Agency Blog

Healthcare Premiums Drop

Toys for Tots Christmas Fun Center
Shield Insurance Agency Blog

Toys for Tots Christmas Fun Center

Getting your Medicare coverage right
Shield Insurance Agency Blog

Getting your Medicare coverage right

Healthcare Insurance Coverage for Business 2021
Shield Insurance Agency Blog

Healthcare Insurance Coverage for Business 2021

Health Insurance Requirements for Small Businesses
Shield Insurance Agency Blog

Health Insurance Requirements for Small Businesses

3 reasons to review & compare Medicare plans
Shield Insurance Agency Blog

3 reasons to review & compare Medicare plans

Halloween & COVID-19: Have Fun While Staying Safe
Shield Insurance Agency Blog

Halloween & COVID-19: Have Fun While Staying Safe

National Do Not Call Registry
Shield Insurance Agency Blog

National Do Not Call Registry

Oct. 20 National Teen Driver Safety Week
Shield Insurance Agency Blog

Oct. 20 National Teen Driver Safety Week

Independent Agent: Dave Ramsey’s Number One Tip
Shield Insurance Agency Blog

Independent Agent: Dave Ramsey’s Number One Tip

How to access your life insurance policy’s cash value
Shield Insurance Agency Blog

How to access your life insurance policy’s cash value

Is Work Life Insurance Enough?
Shield Insurance Agency Blog

Is Work Life Insurance Enough?

6 Home Renovations that Can Affect Your Insurance
Shield Insurance Agency Blog

6 Home Renovations that Can Affect Your Insurance

5 Home Improvement Projects for the best ROI
Shield Insurance Agency Blog

5 Home Improvement Projects for the best ROI

Renovating Your Home to FORTIFIED Standards
Shield Insurance Agency Blog

Renovating Your Home to FORTIFIED Standards

{"slide_show":3,"slide_scroll":1,"dots":"true","arrows":"true","autoplay":"true","autoplay_interval":2000,"speed":300,"loop":"true","design":"design-1"}
Skip to content