As a business owner or someone who helps run a large company, you are likely already quite aware of all the types of insurance that you need to have in place to ensure your financial security. However, that coverage goes beyond the company itself. Most businesses also offer insurances, such as medical, dental, and vision, for their employees to take advantage of.
But how do you figure out who’s allowed to use these benefits? That’s what we’re here to answer today in this guide on everything to know about employee eligibility standards. Below, we’ll cover why employee eligibility standards exist and who they’re for so that there’s no further confusion about the topic.
Why Should You Offer Insurance?
Contrary to popular belief, employers aren’t technically required to offer their employees insurance, regardless of whether it’s for full-time or part-time employees. Even though companies aren’t forced to offer it, the Affordable Care Act (ACA) penalizes the larger ones that have over 50 employees who don’t currently offer any.
During the Obama era, there was an Individual Mandate known as the 2017 Tax Cuts and Jobs Act (TCJA) that required smaller companies to offer some level of healthcare benefits to their staff. Failing to do so would incur heavy fines and penalties for companies. However, the TCJA has since been repealed, fully putting the decision back into the hands of those smaller businesses.
While the lack of legal requirements might make it seem like some companies might find it advantageous not to offer insurance policies, a good majority still do. This is because benefits like these are what attract more experienced workers to the jobs that companies present. Even if you could have an excellent work environment and the perfect job opportunities, failing to offer compressive benefits that cover employees from untimely medical expenses will cause them to look elsewhere for job opportunities. In order to remain competitive, you need to offer insurance to new hires.
What Are the Hurdles of Offering Insurance?
Just because you should offer insurance doesn’t mean it’s easy to do so. These kinds of benefits cost a lot of money, depending on the level of coverage you want to offer. Because of that, smaller companies struggle to compete with larger ones in this department. When the budget is tight for startups, it’s hard to justify making a large payment to something that doesn’t directly lead to more sales.
However, despite not giving out penalties anymore, the government still encourages small companies to offer health insurance whenever possible. Instead of penalizing them, they promote this by offering tax breaks to companies with less than 25 full-time employees.
Another challenge is that not everyone needs health insurance. There are other ways for people to receive coverage, and if what they currently have is better than what you’re offering, they’ll choose to stick with that. While this might sound like a good thing, it can potentially mess up your group rates. If you don’t have enough people sign up for your coverage, you could get bumped down to a lower level, decreasing your larger group discounts. For smaller companies, insurance companies might not even offer a low enough package for the small group of employees who want coverage.
On top of that, when you start to offer insurance to employees, it’s an all-or-nothing type of situation. That means if you have a couple of workers with more severe health conditions, it might end up costing you a bit more to cover them as well. While this is understandable for keeping a fair work environment, it’s something that employers need to keep in mind.
How Do You Determine Eligibility?
The only exception for not offering health benefits is if employees are not eligible for them, which is why we made this guide on everything to know about employee eligibility standards. In general, most of your staff will be qualified for insurance, but we’ll cover all the requirements here.
As previously mentioned, insurance-related benefits are typically for full-time employees. This refers to anyone who works more than 30 hours a week. Employers can offer insurance to part-time workers as well if they work 20 to 29 hours a week, but not doing so won’t incur penalties under the ACA.
However, companies don’t actually have to offer these benefits until that employee reaches either 1250 work hours or a full year of employment. That’s why some businesses have a stipulation that benefits don’t kick in until a certain amount of time of being with the company. Still, many employers offer these benefits right away in order to remain competitive.
Due to the nature of these benefits, another aspect of eligibility that you must consider is citizenship. While it’s legal for people from other countries to be able to work in America, you can’t group them under the same insurance umbrella as the rest of your staff.
You’ll need a specialized international health coverage program, which is why it’s vital to authenticate where your potential employees are coming from. If you require assistance with this, our E-Verify compliance program will be able to help. We can more effectively fill out your I-9 forms to verify who’s eligible to work for you and receive health benefits.
Who Else Can Be Eligible?
The final thing to consider is who else within an employee’s family you want to be eligible for health insurance as well. Under the ACA, larger companies need to offer coverage to legal spouses and dependents under the age of 26 to avoid fines.
Still, just like before, other options are available to companies that want to attract workers. You can expand coverage to dependents over 26, or even to domestic partners that aren’t legally married. The health insurance offered to these two groups must still be comparable to the coverage offered to the ones who legally receive the benefits. Be sure to keep this in mind when deciding whether or not you should offer it as an option to your employees.
Even though insurance is always a bit confusing, now that we’ve covered the details of who is eligible for these types of benefits, you can see that it’s actually pretty straightforward. You either offer coverage, or you don’t. Even though no company is forced to offer insurance coverage, it’s within its best interest to make sure its staff has some level of health insurance available.