Learn about small business insurance for family businesses.
Do you have a family-run small business? If so, you may be in luck when it comes to health insurance. If your family business meets the standards of being a “small business” for insurance purposes, then you can qualify for a group health insurance plan and possibly save on premiums.
Do my family members count as employees?
Companies that sell group health insurance generally have certain coverage rules for various types of policies. If you have a family business and you’re looking to get group health insurance, you should know that your spouse usually cannot count as your one and only employee. If you have other employees (who may also be family members), generally your spouse can enroll in the group plan, though.
So the answer to this question is: some family members count as employees in the eyes of health insurance companies. This may vary based on the insurance company or plan. A licensed health insurance agent can also help you better understand your options.
Do I want group health insurance for my family business?
This is a subjective question, and it always depends on the specific situation and the people employed by your family business. But if you do wish to get a group health insurance plan to cover the employees of your family business (both family members and non-family members), here are some reasons why a group plan can be a great option for a family business:
- You may see premium prices drop per individual. Some group plans purchased by companies have a lower cost per covered individual than individual and family health insurance plans purchased by individuals.
- As the family business owner, you could benefit from tax deductions and credits. These tax opportunities could help pay for health insurance costs that you spend on your employees.
- You may find that offering group health insurance as a benefit helps attract quality employees and helps you keep them.
Can I only extend group health insurance to my family members?
Even though you might call your small business a family business, you still may employ people who aren’t related to you. Keep in mind that with health insurance, playing favorites in any small business isn’t allowed. According to the Society for Human Resource Management when you offer a group health insurance plan to your full-time employees, all employees in that category must be offered the same amount of benefits, whether or not they are family members. You may need legal advice if you are considering offering different benefits to different categories of employees within your small business, whether you consider it a family business or not. An example of what may be allowed is offering fewer benefits to the part-time employees of your small business. Be sure to consult a human resource or legal specialist to avoid any sort of illegal discrimination in your small business.
Although you cannot exclude full-time employees from your group health insurance plan, your employees do not have to join the group plan. Reasons for this could be that they get health insurance from a spouse, wish to buy their own individual insurance, or receive health insurance from a government-sponsored program. Read more about health insurance requirements for small businesses under current law here.
What to know if you’re buying group health insurance for your family business
In addition to being required to offer coverage to all full-time employees if you offer it to even just one employee, there are a few more details about group health insurance to know about:
- You need at least one common law employee, who opts to enroll in the plan.
- You need to be able to prove you are, in fact, a small business.
- Employers must contribute to their employees’ monthly premiums.
Make sure that you understand how “employee” is defined when it comes to health insurance—if the only employee besides yourself in the family business is your spouse, in most cases you will not be eligible for a group health insurance plan.
The requirements listed above are not the only qualifiers for getting a group health insurance plan, and they may differ based on the plan or insurance company. Visit eHealth.com to see plans and plan details.
This article is for general information and may not be updated after publication. Consult your own tax, accounting, or legal advisor instead of relying on this article as tax, accounting, or legal advice.