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Small employer health insurance guide
Some small employers in Texas offer health insurance to their employees.
Note: Texas insurance law defines a small employer as a business with two to 50 employees, regardless of how many hours the employees work.
If you provide health insurance, you must offer it to all your employees who work 30 hours or more each week. You must also offer coverage for their dependents. Business owners can enroll in their small-employer health plan if at least one of their employees also enrolls.
You must give new employees at least 31 days from their start date to enroll in your health plan. If they don’t enroll during this period, you can require them to wait for the next open enrollment period to join. Some employees might have a special enrollment period if they have a life change, like getting married, having a baby, or adopting a child.
You can require employees to wait up to 90 days after they enroll in the health plan for their coverage to start. The insurance company may not charge a premium during this period.
Learn more: How to shop smart for insurance
Paying premiums
The law doesn't require you to pay an employee’s health plan premiums. But your insurance company might require you to pay at least 50% of your employees’ premiums. You may pay a higher percentage if you want to.
Insurance companies may raise premiums because of changes in health care costs, the age of your employees, or employee tobacco use. They can’t raise premiums because of your employees’ health, though.
Coverage and benefits
Federal law requires small-employer plans to cover 10 types of health care services , called essential health benefits. Plans bought before March 23, 2010, and some plans bought before October 1, 2013, aren't required to cover the essential health benefits.
Texas also requires some plans to include certain benefits. Learn more on our Mandated health benefits page.
Insurance companies can’t deny or limit coverage to employees with preexisting conditions.
Workers' compensation insurance
Most employee health plans won’t pay for work-related injuries or illnesses. For that, you’ll need a separate workers’ compensation insurance policy.
Workers’ compensation insurance pays medical costs and some lost wages for employees who have work-related injuries or illnesses. It won’t pay for non-work-related injuries and illnesses or for routine health care.
Texas law doesn’t require you to have workers’ compensation insurance. But if you have it, you’ll be legally protected from some lawsuits and damage awards. For more information, read our Workers' compensation insurance guide .
Learn more: Workers' compensation insurance guide .
Shopping for coverage
You can buy health insurance directly from an insurance company or agent.
Most insurance companies require at least 75% of your full-time employees to participate in your health plan. Employees who have other health coverage don’t count toward your participation percentage.
You can buy coverage at any time during the year. But if you don’t meet the 75% participation requirement, an insurance company can make you wait until the open enrollment period to buy coverage. The open enrollment period is from November 1 through January 15 each year.
Shopping tips
These tips can help you find the best value for your money:
- Understand how cost-sharing works. Some plans will pay for 80% of a covered service, while others will pay 70%. Your employees must pay the rest. Plans that require an employee to share a higher percentage of the cost of services will have lower premiums, but could cost your employees more in the long run. Plans with higher deductibles also usually have lower premiums, but employees will have to pay more out-of-pocket before the health plan pays.
- Consider factors other than cost, such as a company's financial strength and complaint record. You can learn a company's financial rating from an independent rating organization, and its complaint record by calling our Help Line or checking our website.
- Buy only from licensed insurance companies. If you buy from a company that doesn’t have a license, your employees' claims could go unpaid. You can learn whether a company has a license by calling our Help Line or by searching for the company on our website .
How companies set premiums
Your employees’ health won’t affect your rates. Insurance companies can’t deny or limit coverage to employees with preexisting conditions.
Insurance companies consider the following factors when setting your premiums:
- Age of your employees. Plans use a formula set by federal regulation when factoring age into premium amounts. The premium for an employee who is 64 will be three times higher than the premium for an employee who is 21.
- Tobacco use. Federal law allows health plans to charge tobacco users up to 50% more. The higher rate is spread among all the group’s members.
- Geographic area. Health care costs vary by region because of differences in the cost of living and the number of providers in the area.
- Type of plan you choose. Plans have different rules about how your employees get care. For instance, some plans might require your employees to use doctors and providers in the health plan’s network. Other plans might let them go to any doctor or provider they choose. In general, plans that have fewer health care providers to choose from will have lower premiums.
Keeping coverage after employees leave
Under state and federal law, most employees have the option to keep their coverage for a while after they leave their job. You must tell employees how they can keep their coverage.
Former employees who keep their coverage pay the full cost of the plan. You don’t have to pay anything toward their premiums.
The federal COBRA law applies to employers with 20 or more employees. The state continuation law applies to employers of any size.
Question? Call us at 800-252-3439.
Texas Health Insurance
Texas Department of Insurance (TDI) helps Texans make informed decisions about their health insurance. Learn how to find the right type of health insurance for you and your family.
Need health insurance?
On this page, how health insurance helps, health insurance options, affordable health insurance, health marketplace: buying your own health insurance, related links.
- External Link Icon Shop smart for health coverage
- External Link Icon View State employees’ health benefits
- External Link Icon Learn how to fight insurance fraud (PDF)
- External Link Icon View video to stop costly medical bills
- External Link Icon Search for licensed agents or renew Texas insurance license
Health insurance protects you before you get hurt or sick.
If you get hurt or sick and need to go to the doctor, health insurance protects you from paying high medical bills.
Health insurance is also called a health benefit plan. Health benefit plans cover preventative services like wellness visits, shots, and screening tests. These services help you stay healthy and avoid future health problems.
You can get health insurance through:
- Your employer if they offer health insurance. If you lose your job, you can stay on the plan through COBRA
- A membership, union, or church
- An insurance company or agent
- The health marketplace
- Your parent’s plan until age 26
- Your spouse’s plan
- Your college or university if they have a student health plan
- Government programs (see below)
If you own a small business with employees, learn about small employer health insurance .
- External Link Icon Compare health insurance plans
Federal and State programs help people with limited or no money.
Government health insurance and benefit programs have options for:
- Children and pregnant women through the Children’s Medicaid or Children's Health Insurance Program (CHIP)
- Adults who may not be able to afford private coverage through Medicaid
- Most adults over age 65 and people with disabilities through Medicare
Alternative health plans can help save money but may limit health coverage. Learn more about alternative health plans .
If you do not have health insurance, you can contact your local community health center for assistance .
These centers provide high quality, low-cost health care on a sliding fee scale to individuals and their families regardless of age, health, insurance, or immigration status.
Insurance you buy from a company or the marketplace is individual insurance. It’s sold to individuals, not to members of a certain group.
You can buy individual coverage through:
- An insurance company or health maintenance organization (HMO)
- A licensed health insurance agent who has a relationship with one or more insurance companies
- Healthcare.gov , the online federal health insurance Marketplace
- The Plan Finder on Healthcare.gov for individuals and small businesses
- A Navigator approved to help with Marketplace enrollment
- External Link Icon Get more tips on buying health coverage
Home » Blog » Business Insurance » The Texas Small Business Health Insurance Guide
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The Texas Small Business Health Insurance Guide
Interested in learning more about small business health insurance for Texas? Check out this guide with information on types and costs, plus where you can go to purchase health insurance.
Merchant Maverick Contributor
Small business health insurance in Texas doesn’t need to be daunting. With the flexibility of options available to employers and employees alike, it’s easy to incorporate coverage into your risk management plan.
In Texas, small businesses employ over 4.9 million Texans — 45.1% of the workforce. Many of those business industries are growing rapidly. Small business health insurance remains a decisive factor in attracting, retaining, and nurturing Texan talent as actions have been taken to broader its accessibility in recent years.
To understand the wide scope of health insurance for small businesses, check out our full guide here .
Keep reading about how health insurance for small business owners specifically works in Texas.
Table of Contents
Key Health Insurance Terms
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Health insurance refers to insurance policies that cover medical expenses. Small business health insurance is group insurance designed to meet the needs of a smaller organization that may not have a full HR department to organize health benefits. In Texas, small businesses utilize the government’s Small Business Health Options Program (SHOP) and purchase insurance through the federal health insurance website.
Health insurance protects people if they need medical care due to an illness or an injury. Preventative care such as routine check-ups and annual tests is usually covered, too. The amount of money a person might pay for a routine visit, surgery, or medical emergency will vary depending on the health plan.
In a perfect world, everyone would have health insurance. Illnesses and accidents are unavoidable as we journey through life. Even healthy people need regular visits with a doctor or coverage in case of an emergency.
According to Statista, Texas had the highest rate of uninsured Americans per state population in 2021. On a more positive note, that number is 16.1% as opposed to 19.1% in 2017, indicating that coverage for Texans is steadily expanding.
As you’re brushing up on health insurance, knowing these important terms will simplify the process:
- Deductibles: This is what you pay before your health insurance covers you. (Lower premiums per month might result in a higher deductible.)
- Copayment (Copay): This is the fixed amount you pay for services. For example, every office visit is $20 or every prescription is $10.
- Coinsurance: This is the percentage of the cost you will pay for services after you’ve reached your deductible. (For example, with a 20/80 coinsurance, you will pay 20% of the cost for services and your insurance will cover 80%.)
- Out-Of-Pocket Limit: The maximum amount of money you are expected to pay for services in a calendar year. After your limit, the insurance covers 100% of the services.
- Health Care Provider Network: This is a list of doctors and other providers that will accept your insurance.
- In-Network: A specific list of providers/specialists your insurance will accept.
- Out-Of-Network: Providers and specialists that your insurance may not pay for or will cover a smaller portion of the expenses.
Am I Legally Required To Provide Health Insurance In Texas?
If you are a small business owner with over 50 employees, you are legally required to offer insurance to your employees. If you are a small business owner with between two and 50 employees, offering health insurance is optional.
Even though you may not be legally obligated to offer health insurance, offering health insurance can offer your business several benefits. In addition to your employees feeling happy, healthy, and comfortable working for you, you are eligible for tax credits and deductions if you pay at least 50% of employee premiums.
According to the Texas Government, “Texas insurance law defines a small employer as a business with two to 50 employees, regardless of how many hours the employees work.” Additionally, Texas law counts 120 hours done by part-time employees in a month as a full-time equivalent employee. Texas laws don’t require you to pay your employee’s premiums, although many insurance companies will require you to pay at least 50% of employee premiums.
Also, according to Texas law, if you offer health insurance to any employees, you must offer it to all employees who work 30 hours or more a week and all employees’ dependents. You can make employees wait up to 90 days before they are eligible for health insurance benefits, and if employees don’t sign-up for insurance within a 31-day window, you can deny them insurance benefits until open enrollment.
Small businesses beware: if fewer than 75% of your employees participate in your health insurance program, most insurance companies will make you wait until open enrollment to begin your plan. Employees with individual health plans don’t count toward that percentage. Businesses with over 75% participation can enroll anytime.
Federal law requires small-employer plans to cover 10 types of essential health benefits.
These benefits include:
- Outpatient care
- Emergency services
- Hospitalization and surgery
- Maternity and newborn care
- Mental health and substance use disorder services
- Prescription drugs
- Rehabilitative services and devices
- Laboratory services
- Preventive and wellness services
- Pediatric services
An individual health insurance plan is a health insurance plan that an individual pays for and designs to fit their needs. One option for small businesses is to give employees a monthly sum and have the employee take control of where to purchase insurance. With the addition of the individual health marketplace, more people can invest in health insurance without the need to go through a group insurance plan. A group health insurance plan is where a group (namely, a company or business) buys insurance for members of that group at a reduced rate.
Health insurance is expensive and fluctuates with rising healthcare costs. For group health, premiums continue to rise, and employers require their employees to pay more for the financial burden.
Which Type Is A Good Fit For Your Business?
Group plans are great for businesses with a growing number of employees, especially those who might have families. The more people to cover, the more cost-effective a group plan will be. Also, you can negotiate rates if you have a young and healthy staff.
Small businesses looking for ways to save on health care may want to promote individual plans. With a defined contribution plan, tax-free money is given to an employee each month to spend on health insurance. More individualized care means that health money could be spent more efficiently.
Texans can access the federally-run marketplace at HealthCare.gov to see a list of insurance plans available in their state. As you start to shop, you will find that there are several specific health insurance plans for you to choose from. The main differences come down to:
- Size of the network
- The cost for you and for your employees
- The ability to see specialists without referrals
- The size of the in-network
- Cost coverage for out-of-network services
Here is an overview of each major health insurance plan and what they mean for your small business.
Health Maintenance Organization (HMO)
An HMO is a type of health insurance plan with a network of doctors accepting your insurance. Your employees only have access to providers employed through the HMO and out-of-network care is often not covered (except in an emergency). The HMO provides a lower cost option to employees but lowers the choices of providers/hospitals where they can be treated.
The HMO plan is ideal for:
- People who want to know exactly what each visit will cost
- Young and healthy people
- People with known health procedures and a significant number of appointments (for example, pregnancy)
- People who don’t need many specialists
- Focused on prevention and wellness
With an HMO, the insured must retain a Primary Care Physician and go through that doctor for referrals to specialists. That means this plan is not ideal for people who need care across a wider geographical area, such as people who travel. However, out-of-pocket expenses tend to be lower and more predictable.
Preferred Provider Organization (PPO)
A PPO is a type of health insurance plan where a network of doctors agrees to accept a set payment. Unlike the HMO, you aren’t limited to in-network provers, so you have access to any health provider you choose — out-of-network providers just cost more. You also do not need a referral for specialists. Since A PPO has the most choices, the premium costs are generally higher.
The PPO plan is ideal for:
- People who might spend more for more specific care
- People who want a choice on which medical professionals to visit
- People who visit specialists and want the option to choose their own
The PPO plan is more choices for more money and with greater flexibility.
To learn about the other types of health insurance available, read our Ultimate Guide To Small Business Health Insurance .
How Do I Find Small Business Health Insurance In Texas?
Now that you understand your insurance obligations as a Texas small business owner and know how much health insurance will cost, where do you find health insurance?
Go to healthcare.gov and search for available plans in your area to see what’s available. According to healthinsurance.org, the participating insurance companies in Texas in 2023 include:
- Ascension Personalized Care
- Imperial Insurance Companies
- Aetna CVS Health
- Celtic/Ambetter
- SHA/FirstCare
- Moda Health Plan
- Community Health Choice
- Scott & White Health Plan
- UnitedHealthcare of Texas
Note: Participants change yearly. Visit healthcare.gov for the most up-to-date information and providers.
The open enrollment period for coverage in 2023 was recently closed.
On November 1, open enrollment for individuals or companies with fewer than 75% of their employees will be available again. Open enrollment in Texas goes from November 1 to December 15 for businesses and up to January 15 for individuals.
Choosing the right plan for your business comes down to asking yourself the following questions: What kind of medical care do my employees need? How much money am I willing to put into health insurance? And, is choice or cost more important to my employees?
In order to determine which policy will work best, decide how many of the upfront costs you are willing to contribute to your employee premiums and what kind of insurance options would be the best fit. Here are the biggest factors in health insurance costs:
- Medical history
- Prescription drug coverage
- How many visits are needed to a doctor per year
- What specialists are provided, if any
- Specific employee medical needs and history
- Any plans for pregnancies, etc.
Think about your employees, their ages, and their needs. With an outline of what best suits your employees, you’ll be able to sit down with an insurance agent or broker and determine how to get the best policies for the cost.
The cost of business insurance is always at the forefront of decisions as a business owner. The federal marketplace for small employers has categories of Bronze, Silver, and Gold plans. These plans are based on your employee’s age.
Here are some sample prices for ages, taken from the SHOP Marketplace data.
Prices are listed in order of bronze, silver, and gold plans, and rounded to the nearest dollar. This is the cost per employee, per month.
- Employees younger than 21: $102, $142, $164
- Employees between 21 and 30: $160, $223, $259
- Employees in their 30s: $182, $253, $293
- Employees in their 40s: $205, $285, $331
- Employees in their 50s: $286, $399, $331
- Employees 60 and older: $434, $606, $703
Choosing to insure the health of your employees is the right decision. Follow the steps to get insurance through the federal marketplace once you’re ready to buy a health insurance policy. Acquaint yourself with the terms of each insurance package and help employees understand their benefits, too.
It’s easier than ever to find a way to protect your health and the health of your employees with health insurance, so don’t be afraid to take the leap.
Even if you have just one employee and you want to insure them, we have a guide for health insurance for one employee. To learn more, check out our additional resources to help you understand health insurance for small businesses.
Health Insurance For Texas Small Business FAQs:
Small business health insurance is a type of health insurance employers can purchase that provides financial assistance to employees who need medical care for illnesses, injuries, and routine checkups.
You can get health insurance for your small business in Texas through healthcare.gov’s marketplace.
A small business has to provide health insurance in Texas when it has over 50 employees per federal law. Employees who work 30 hours a week or 120 hours a month are eligible for coverage.
In 2022, the penalty in Texas for not providing health insurance to qualified employees was $2,750 for the first 30 employees. Employers must cover 95% of their eligible employees, including their employees’ dependents.
The cost of providing small business health insurance to employees in Texas varies from $102 to $703, depending largely on their age and the policy type. Expect to pay an average of around $163 per employee.
The easiest ways to save on health insurance are paying your policy in full (if doing so provides a discount) and increasing your deductible, which is the money paid before insurance companies provide coverage.
You can find health insurance for your small business in Texas by going to healthcare.gov during the open enrollment period. It’s also possible to purchase plans directly from an insurance carrier or through a broker.
The types of business insurance you need for your small business in Texas will vary according to your specific business needs and risks. Generally, it’s best to start with general liability , workers’ comp , and commercial property insurance if you have a physical storefront, and then scale up from there.
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Sana Benefits - Texas Content
Texas Content
Small business health insurance in texas.
Affordable. And built for Texas small businesses.
Everything may be bigger in Texas, but it doesn’t mean your health insurance costs have to be. Sana is based in Austin, Texas, and we offer comprehensive, flexible plans that fit most any budget. You’ll use Sana’s easy-to-use admin platform, your employees can see any doctor they want, and they’ll have access to free virtual doctors’ visits.
Sana plans in Texas
Sana vs. blue cross.
We don’t do hidden fees. With Sana, your costs are transparent and predictable so you can budget with confidence.
Forget out-of-network hassles and limitations. Our PPO Plus network is all-access, meaning you and your employees can choose any provider without out-of-network costs or referrals.
Sana offers you access to high-quality providers and the ability to add dental and vision care to any plan. Video doctors’ appointments, mental wellness, physical wellness, maternity and pediatric care are all included.
You own your plan, so you own your data. We give you access to modern tools that make understanding and administering your plan simple and transparent.
Texas does not require any company to offer health insurance benefits, although the Affordable Care Act (ACA) does. But not all companies are under the health care mandate. If your company has 1 to 50 full-time employees, you do not have to provide them with health insurance. However, offering coverage will make you a more attractive employer to employees evaluating their options.
Sana provides plans to businesses with five or more employees.
Establish your budget and objectives. You can streamline the process by working directly with Sana, so you don’t have to use brokers or third-party administrators. In addition to providing plan administration and claims adjudication, we’ve got a seasoned implementation team to help you onboard. Also, you are not required to wait until your current plan cycle ends. You’ll be able to transition mid-year with our team’s help.
Your costs will vary depending on the percentage of employee premiums you cover, the number of people you enroll, and whether you cover employees only or also their dependents. Your choice of plan also influences costs (and that of your employees).
Sana negotiates pricing with providers based on objective, industry-accepted metrics. Shrinking provider markups reduces the cost of care, making premiums more manageable. As a small business, you can deduct the cost of employee premiums from your federal taxes. You may also qualify for a tax credit.
Of course. The dashboard on our site allows employers and administrators to easily add new employees, update contact information, adjust benefits (such as when an employee has a Qualifying Life Event), or remove employees from the plan. Additionally, plan administrators can take advantage of Mineral (formerly ThinkHR) for free. Mineral provides plan administrators with a team of advisors for assistance with HR-related programs and tasks. They can get a compliant employee handbook with prewritten and automatic policy updates, and they can use an award-winning resource center.
See what our members say about Sana
“Thank you for everything that you’ve done for me! You made what could have been a difficult and stressful insurance process into one that is manageable. You took the time to explain everything to me and went out of your way to contact my providers. On top of that, you are one of the sweetest, kindest people I’ve had the pleasure to work with.” Kristi, Member
“We have been loving Sana, the customer service and coverage are both wonderful. You guys have been a breath of fresh air…health care carriers have always been a thorn to work with. So, working with y’all has been professional, efficient, and personable. Appreciate all you do!” Beth, Member
“We definitely reduced our cost in health insurance by about 40%. It was a big savings and a no-brainer.” Brian, Member
Lowest monthly SHOP health insurance premiums in Texas
Want a custom premium quote.
- See if you can pay even less. If you have fewer than 25 employees making less than an average of $50,000 per year, you may qualify for a tax credit worth up to 50% of your contribution to employees’ premiums. Use our Premium Tax Credit Estimator .
- Want some help? Find a SHOP agent or broker. Visit Find Local Help to find a SHOP-registered agent or broker in your area. Using an agent or broker won’t cost you more and can make the process easier.
Best Small Business Health Insurance in Texas
by Misty Berryman | Sep 17, 2022 | Group Insurance , Health Insurance , Small Business Insurance | 0 comments
Small Group Strategy #1: Do Nothing – Leave Your Employees to Fend for Themselves
If you have fewer than 50 employees, you’re not required by law to provide any coverage, so why should you bother?
Well, I just touched on one of the most important reasons. If you don’t do something, your current and potential employees may not hang around very long. They’ll find an employer who cares enough to offer at least something in the way of healthcare coverage.
Why does access to healthcare matter so much to employees and job hunters today? There are many reasons, but the most important include:
- Costs – Access to medical care has never been more costly. All it takes is one unexpected illness and you could find yourself facing tens or even hundreds of thousands of dollars in hospital and doctor bills. Going without health insurance just isn’t an option any longer.
- Access – While the Affordable Care Act did a lot of good for a lot of people (mandatory coverage for preexisting conditions comes to mind), it didn’t necessarily completely level the playing field. Buying health insurance through the exchange can be incredibly costly. Most people prefer to work with their employer to obtain health insurance to ensure that they get the coverage they need for a rate they can afford.
- Complexity – Obtaining health insurance is more complicated than ever before, particularly for those trying to do it on their own. By offering a plan of some sort, whether that’s through small group insurance, a small group health sharing plan, or an HRA, you help your employees tame the chaos in their lives and build both goodwill and loyalty, leading to a better brand image, as well as improved talent retention.
So, as you can see, doing nothing isn’t really an option. The good news is that even very small, cash-strapped companies can afford to offer something in the way of healthcare coverage. Your three real options are small group health insurance plans, small group health sharing plans, and health reimbursement arrangements, but they’re not the same. I’ll help you understand all three and what each offers your business (and your employees).
Small Group Strategy #2: Small Group Health Insurance Plans
So, now that we’ve done away with the myth that doing nothing is a viable option, let’s explore your first real choice – small group health insurance plans. What are they? How do they work? Why consider going this route?
Small group health insurance plans are available from quite a few carriers in Texas. They’re offered to groups of two to 100 employees, as well, so very small businesses can benefit, but companies with over 100 employees will have to consider something else.
Group health insurance remains the most popular way for small businesses to offer health benefits to their employees. And, if your business has fewer than 25 employees, you might be eligible for a small business tax credit, potentially saving you up to 50% of your total contributions here.
How do these plans work? First, you’ll need to compare your options and then choose a carrier. Once you have a carrier, you’ll need to pick a policy plan. Based on that plan, you’ll pay a fixed premium for every enrolled employee within the plan (your employees may elect not to join the plan, particularly those who are covered by a spouse’s plan with better coverage).
Each employee will pay their share of the premium from their paycheck. They will be covered by the plan as long as they are enrolled and employed. If they choose to leave the plan, they lose coverage. If they leave employment with your business, they also lose their coverage.
Small group health insurance plans work just like those purchased on the individual market. The benefit here is the ability to offer cost-effective coverage in most cases. You may also find that your small group plan is qualified for an HSA – health savings account – which can allow employees to use their healthcare plan as an additional savings vehicle, similar to a 401(k) or IRA.
Small Group Rules and Requirements
Most groups require participation of at least 70% of your workforce, during most of the year.
There is an open enrollment period that runs from 11/15 through 12/15 every year allows groups of any size to get the coverage they need, even if you don’t have the 70% participation rate required.
You are also able to set your waiting period before a new employee can enroll in the plan. Most employers choose to go with a 30-day period, but you can customize the duration to meet your specific needs.
Request a Group Quote for Your Small Business
The pros and cons of small group health insurance plans.
While there’s a lot to love about small group health insurance plans for Texas small businesses, there are a few drawbacks, too. Let’s check out the pros and cons.
- Tax-deductible contributions (employer and employee)
- The ability to reduce employee turnover and build a stronger brand
- If you have fewer than 25 employees, you could save even more with a tax credit.
- You can set up an HSA for your employees with these insurance plans.
- You can buy into a plan whenever it works for you, rather than having to deal with enrollment periods like those found on the individual market.
- Sometimes individual plans will be more affordable, particularly for low-income employees who qualify for an incentive on the exchange.
- Your employees will have fewer (or no) choices when it comes to customizing their healthcare coverage.
So, there you have it. Small group health insurance plans are the most popular option for small businesses in Texas, and they can offer quite a few benefits. However, they’re not perfect and they’re not the right solution for all situations. Now let’s explore HRAs and what you need to know about them.
Small Group Strategy #3: Health Reimbursement Arrangement (HRA)
HRAs enable you to reimburse your employees for the cost of their individual health insurance, tax-free.
In this situation, you let your employees choose the plan that works best for them (an individual plan purchased on their own) and then you reimburse them for a portion of the costs of that plan. Most employers choose to use that reimbursement to cover their plan premiums, but there are other options, including using them for dental insurance, covering out-of-pocket costs, vision insurance, and more.
The primary benefit of an HRA is that it can be incredibly flexible. Whereas small group health insurance plans lock employees into a very rigid structure with little ability to customize their care, HRAs offer the opposite. Employees can choose a plan that offers precisely the coverage they want and need, and each employee can customize their health insurance.
That flexibility carries over to the employer, too. For instance, as a Texas small business owner, you get to decide how much to contribute each month and you don’t have to be concerned about unexpected cost fluctuations.
Both employers and employees appreciate HRAs for what they do best – allow individuals to customize their coverage while saving money and preventing them from being locked into a rigid plan that doesn’t meet their needs.
The Pros and Cons of Health Reimbursement Arrangements
As with small group health insurance plans, HRAs also have their pros and cons. Let’s look at how they stack up.
- You (the employer) get to choose how much you contribute and there are no minimums that need to be met.
- You (the employer) get to set the rules that govern your HRA, ensuring maximum flexibility for your business and your employees.
- Your employees get to customize their plan, ensuring that they can find something that fits their individual needs, instead of being forced into a one-size-fits-all plan.
- Employees are required to have individual coverage.
- In most cases, employees receiving a reimbursement from an HRA do not qualify for government subsidies provided by the Affordable Care Act.
In the end, HRAs offer flexibility and individuality. They empower both employers and employees, too. However, they’re not necessarily the right solution for all small businesses in Texas. Now, let’s cover your final option – small group health sharing plans.
Small Group Strategy #4: Small Group Health Sharing Plan
Now it’s time to discuss what might be the most interesting of the three options for small businesses in Texas seeking ways to offer health insurance to their employees: small group health sharing plans.
Before we dive into the specifics of health sharing plans for small businesses, it might be helpful to explain the basics, since healthshares are available for consumers and businesses alike. So, what’s a health sharing plan?
It’s exactly what it sounds like – a group that comes together to share the costs of medical care for members. It’s a cost-sharing program, not health insurance. You can think of them like co-ops, and they’re increasingly popular with people across the US as healthcare costs continue to rise and the complexity involved with insurance increases.
You’ll also find that many of these plans are based around the idea of people of the same religious faith helping one another out. These so-called health care sharing ministries (HCSMs) usually reserve membership for those who share their specific faith and may not share the costs of procedures that don’t align with their faith or medical care for conditions sustained in activities not condoned by their faith.
With that being said, the healthshare model has become so popular that non-faith-based options are springing up. These provide the same cost-sharing benefits found with HCSMs, but they do not limit membership to a specific body of believers (or to any particular belief in the first place), nor do they place religious-based prohibitions on procedures or treatments.
How do health sharing plans work, though? In exchange for a monthly contribution, health share plan members can have their medical expenses shared across the group and paid for a fixed-price reimbursement model.
Is a health sharing plan the right choice for your business? If there are not a lot of serious pre-existing conditions (that could have waiting periods before sharing begins), it could be a very affordable way to provide excellent benefits to your employees.
The Pros and Cons of Health Sharing Plans for Employees
Like small group plans and HRAs, health sharing plans come with some pros and cons.
- Health sharing can be one of the most affordable solutions for small businesses and their employees.
- Health sharing is only available to small employers.
- Health sharing plans are not comprehensive, and some employees may find that they need supplemental options.
- Health sharing plans are not well-suited for those with significant medical needs, chronic health conditions, and the like.
- Health sharing contributions are not tax-deductible, nor do they go toward the deductible of a catastrophic health plan.
Compare Pricing on the Best Healthshare Plans Available
We help small businesses who don’t currently offer benefits find very affordable ways to do so. We also help businesses with high group health insurance premiums find ways to lower their costs while still keeping their employees happy.
Schedule a phone conversation with one of our Personal Benefits Managers to discuss your options as a small business owner. If you are considering an HSA or a healthshare plan, you can click here to get a quote on individual plans.
Here are some additional articles on small group health insurance programs: The Most Effective Healthcare Strategies for Small Businesses With Less Than 50 Employees | 6 Best Small Business Health Insurance or Healthshare Plans in Ohio
Hi! I’m Misty Berryman, and I’m one of your Personal Benefits Managers. I like working with HSA for America because we’re creating solutions to healthcare problems. Our focus on money-saving alternatives like HSA plans and health sharing programs, and the variety of health share programs we offer, are what set us apart. Read more about Misty on her Bio page .
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Note: Texas insurance law defines a small employer as a business with two to 50 employees, regardless of how many hours the employees work. If you provide health insurance, you must offer it to all your employees who work 30 hours or more each week. You must also offer coverage for their dependents.
Health insurance is also called a health benefit plan. Health benefit plans cover preventative services like wellness visits, shots, and screening tests. These services help you stay healthy and avoid future health problems. Health insurance options You can get health insurance through: Your employer if they offer health insurance.
Small business health insurance is group insurance designed to meet the needs of a smaller organization that may not have a full HR department to organize health benefits. In Texas, small businesses utilize the government’s Small Business Health Options Program (SHOP) and purchase insurance through the federal health insurance website.
Sana offers Texas small business health plans that allow for predictability and control while cutting your costs – all without sacrificing quality care. Sana Primary care visits $25 Urgent care visits $25 Specialty care visits $50 Emergency room $200 No out-of-network fees 95% customer satisfaction Free virtual care visits on most plans
Texas | HealthCare.gov Lowest monthly SHOP health insurance premiums in Texas Below is a snapshot of the lowest SHOP premiums available in Texas. Employers with between 1 and 50 full-time equivalent employees can offer insurance through SHOP. Premiums shown are total costs per employee per month.
Small group health insurance plans are available from quite a few carriers in Texas. They’re offered to groups of two to 100 employees, as well, so very small businesses can benefit, but companies with over 100 employees will have to consider something else.