Financial Education Center

Health insurance is a must for everyone. Most individuals, being employed by others, are covered automatically by their employer's health insurance plan. As a business owner, you do not have this luxury.

Basically, medical coverage is offered in the following ways:

1. spouse's employer
2. association and group insurance
3. individual policies

Coverage by Your Spouse's Employer

Fortunately, many business owners are covered by their spouse's health plan. Your spouse's employer subsidizes the actual cost of insurance to you. It is important to realize two things: 1) Obtaining coverage through your spouse's employer has many features and benefits you most likely will not be able to obtain individually, and 2) it reduces your premium payments dramatically. So, if your spouse is working and has medical coverage through an employer, make certain you and all your children are included in the plan. If you can't get coverage through your spouse, you have several choices, none of them cheap, but you absolutely must have medical insurance.

One provision of the Affordable Care Act is the minimum coverage provision, also called the individual mandate. Coverage does not have to be supplied through the exchange. People can also get healthcare coverage through an employer, COBRA, Medicare, veterans' benefits. etc. The penalty for not having health insurance has been eliminated since 2019.

Association and Group Insurance

If you cannot get health insurance benefits through regular employment or if you are not able to convert a group policy to an individual one when you leave a job, you may be able to purchase group insurance through an association. The most common groups offering insurance to members are trade and professional associations, labor unions, business groups, civic organizations, and college alumni associations. Association and group insurance is usually cheaper than buying coverage on your own, because the group can often negotiate a better discount from an insurer than an individual.

Individual Policies

If you have to buy an individual medical insurance policy, you can search for one through the Health Insurance Marketplace. The Health Insurance Marketplace, also called the exchange, opened in October, 2013. People are required to wait for annual open enrollment periods to apply for new healthcare coverage. December 15, 2019 was the last day to enroll in or change plans for benefits to become effective on January 1, 2020. In every state, open enrollment for ACA-compliant 2021 health coverage for individuals and families will start on November 1, 2020. In most states, it will end on December 15, 2020. People who are uninsured or who buy their own, private health insurance can use the exchange to search for affordable healthcare plans, based on their income and other factors. Even if you are covered by your spouse’s employer-sponsored plan, you can still search for coverage through the exchange. However, if you are eligible for coverage under your spouse’s employer-sponsored plan, you most likely won't be eligible for a healthcare subsidy. Access the Health Insurance Marketplace at www.healthcare.gov. You don’t have to purchase health insurance through the Exchange. You can also search for private insurance and compare rates on your own or through an insurance broker. 

The Affordable Care Act (ACA) requires companies with more than 50 full-time equivalent employees (often referred to as applicable large employers or ALEs) to either provide health insurance to their employees or pay a penalty for not offering affordable coverage. In 2017, Congress repealed the individual mandate that required individuals to have insurance, but the employer requirements for employers with more than 50 full-time equivalent employees is still in effect. For small businesses (fewer than 50 full-time employees), health insurance is not a requirement under the ACA.

The ACA requires that the employer offer minimum essential coverage to at least 95 percent of its full-time employees and their dependents. Most insured or self-insured group health plans will constitute minimum essential coverage. The coverage must be offered to 95 percent of employees working, on average, at least 30 hours per week and their children up to age 26. The ACA defines a full-time employee as an individual who works an average of at least 30 hours per week (or 130 hours per month). Part-time employees working less than 30 hours per week are not required to be offered coverage. Interestingly, spouses are not considered dependents for this purpose; therefore, employers are not required to offer coverage to spouses in order to avoid the penalty.