Small Business Health Insurance Guide

Health Insurance

Some small Texas employers offer health insurance to their employees.

Note: Texas insurance law defines a small business owner as a business with 2 to 50 employees, regardless of how many hours the employees work.

If you offer health insurance, you must offer it to all of your employees who work 30 hours or more each week. You must also provide coverage for their dependents. Business owners can enroll in their small business health plan if at least one of their employees is also enrolled.

You must give new employees at least 31 days from the date they begin to enroll in your health plan. If they do not register within this period, you can ask them to wait until the next open registration period to join. Some employees may have a special enrollment period if they have a change in their life, such as getting married, having a child, or adopting a child.

You can ask employees to wait up to 90 days after they enroll in a health plan to start their coverage.

Pay the installments

The law does not require you to pay premiums to an employee’s health plan. But your insurance company may require you to pay at least 50% of your employees’ premiums.

Insurance companies may raise premiums because of changes in health care costs, the age of your employees, or employees’ tobacco use. However, they cannot raise insurance premiums due to the health of your employees.

Coverage and benefits

Federal law requires that small employer plans cover 10 types of health care services, called essential health benefits. Plans purchased before March 23, 2010, and some plans purchased before October 1, 2013, are not required to cover essential health benefits.

Insurance companies cannot refuse or limit coverage to employees with pre-existing conditions.

Workers Compensation Insurance

Most health plans will not pay employees for work-related injuries or illnesses. Therefore, you will need a separate workers compensation insurance policy.

Workers’ compensation insurance pays for the medical costs of some lost wages for employees who suffer work-related injuries or illnesses. You will not be reimbursed for injuries and illnesses not related to work or routine health care.

Texas law does not require you to have workers compensation insurance. But if you have it, you will be legally protected from certain lawsuits and awards of damages. For more information, read the Workers Compensation Insurance Guide.

Shopping for coverage

You can buy health insurance directly from a company or insurance agent.

Most insurance companies require at least 75% of your full-time employees to participate in your health plan. Employees with other health coverage do not count towards your participation rate.

But if you don’t meet the 75% participation requirement, the insurance company can make you wait until the open enrollment period to purchase coverage.

Tips can help you find the best value:

Understand how cost sharing works. Some plans will pay 80% of the 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 may cost your employees more in the long run. Plans with higher deductibles usually have lower premiums, but employees will have to pay more of their money before the health plan will pay.
Consider factors other than cost, such as the company’s financial strength and complaint history. You can find out a company’s financial rating from an independent rating agency, and their complaint history by calling our helpline or checking out our website.
Only buy from licensed insurance companies. If you buy from a company that does not have a license, your employees’ claims may not be paid. You can find out if a company has a license by calling our helpline or by searching for the company on our website.
How do companies determine insurance premiums?
The health of your employees will not affect your rates. Insurance companies cannot refuse or limit coverage to employees with pre-existing conditions.

Insurance companies consider the following factors:

The age of your employees. Plans use a formula established by federal regulations when calculating age in premium amounts. The premium for a 64-year-old employee will be three times higher than the premium for a 21-year-old employee.
Tobacco use. Federal law allows health plans to charge tobacco users additional fees of up to 50%. The higher rate is spread among all the members of the group.

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