We get it, health insurance is not always the first thing you’re going to think about when you’re building your new business in Maine. But providing health care to your employees is a huge part of attracting and retaining the right talent. That’s why Taro Health wants to give you as many resources as possible as you think about providing health insurance benefits for your small business.
Are you a small business owner in Greater Portland looking for health insurance benefits for you and your team?
As a small business of fewer than 50 employees, you’re able to access Taro Health in different ways that can be not only beneficial to you as a business owner but for your employees with full major medical health insurance coverage.
There are now more options than ever! Gone are the days of the rigid, expensive, one-size-fits-all group plan. With health reimbursement arrangements, or HRAs, you can offer your employees flexible, customizable, tax-free reimbursements for health insurance. And in many cases, owners can participate as well. Let’s take a look at the options available for health insurance for small business owners.
Check out Taro Health’s benefits and plan offerings here.
What are the options for health insurance for small business owners?
- Group insurance: Historically, small-group insurance has been the primary option for many small employers who are looking to offer health benefits for their employees. These plans are well known, tax-free, with solid product options, and are proven to be an effective retention strategy.
You can shop for a small-group Taro Health plan by contacting a health insurance broker or submitting your contact information below.
- Self-funded plans: Technically speaking, self-insured employers pay for claims out of pocket when they arise as opposed to paying a predetermined premium to a carrier for a small group plan. This type of plan is usually seen with a large enterprise as a means to control their healthcare spend and manage their own risk pool. A third party administrator (TPA) is engaged to process claims for this type of plan. The benefits of this type of plan are that it's more customizable to your workforce, you have control over the health plan reserves so you can maximize your interest income, there's no pre-funding of health coverage, and you aren't subject to state health insurance premium taxes (typically 2-3%).
- Health Reimbursement Arrangements(HRA): A health reimbursement arrangement is an affordable, tax-advantaged alternative to traditional insurance. The reimbursement model is simple: An employer decides how much money to contribute each month, provides their employees with standard information about how the HRA works, and outsources some administrative functions like verifying coverage. The employee chooses a plan that works for them, submits receipts for premium payments and medical expenses (if applicable), and gets reimbursed. Super simple.
In Maine, individual health insurance rates may actually be lower than small group health plan premiums, meaning that your benefits dollars will stretch further with ICHRA.
What is the best option for me as a small business owner in Cumberland County?
ICHRA: the individual coverage HRA is based on reimbursing employees for insurance rather than buying it for them, and brings with it a design feature that allows owners to scale benefits by class.
- It offers the most flexibility, with 11 ICHRA employee classes, the employer gets to choose, for example, how much to reimburse full time vs. part time employees, seasonal employees, and salaried vs. non-salaried employees.
- ICHRA works for companies of any size: from a start-up to a large company.
- There are no reimbursement limits.
- It can also be combined with a group plan.
If you want to dive deeper into ICHRA, Take Command has a comprehensive guide (here), and FAQ page (here.)
When you visit CoverME.gov as a small business owner, you’ll be able to compare estimates of both employer and employee costs when coverage is provided via a Small Group Plan, an Individual Coverage Health Reimbursement Arrangement (ICHRA), or by raising wages.
You can also visit the Maine Bureau of Insurance (BOI) website to learn more about health insurance for small businesses. BOI offers a Small Group Health Insurance Rate Calculator, which can help you estimate your Small Group premiums.
How does HRA eligibility work for small business owners?
Whether or not self-employed owners can participate in an HRA depends on how the plan and business are set up.
In order for a business owner to participate in an HRA, they must be considered an employee of the business.
- Partnerships: Partners are directly taxed, making them self-employed and not eligible for participation in ICHRA
- Corporations: (Including C-Corps, B-Corps, Non-Profits, and LLCs taxed as C-Corps - anything where the entity is separate from ownership.) Corporations are the easiest entity type to handle when it comes to health insurance because owners are considered employees and can benefit from the company’s ICHRA. Their dependents and any W2 employees can benefit as well.
- S-Corps: An S-Corp owner that owns more than 2% of the company is considered self-employed and not an employee, therefore typically cannot participate in the HRA. However, self-employed individuals can already deduct some health insurance expenses without an HRA.
- Sole proprietors: These unincorporated businesses are owned and operated by one individual with no distinction between the business and owner. In a nutshell: The sole proprietor is not an employee and will not qualify for an HRA.
Sign up for Taro Health through employer sponsored ICHRAs
As a small business owner, you can set up an ICHRA through our partner Take Command. Through this platform, your employees will be able to shop for a Taro Health plan of their choice.
Take Command can help small business owners!
While we always advise our clients to speak with their CPA before jumping in, we are ready to chat on our website if you have any specific questions about your business and how HRAs could help. Setting an ICHRA is simple and quick, and Take Command team is here to help if you need it.