What employers & small businesses need to know when choosing health insurance in Texas

One way to show your employees you care about their well-being — and to have a competitive hiring process — is to include a health insurance plan as one of your benefit offerings. Doing so can also lead to a healthier and happier workforce, which can benefit your company’s productivity and overall bottom line. If your business is located in the Lone Star State, read on for what you need to know about small business health insurance in Texas.

What is small business health insurance?

Providing your employees with healthcare coverage is a great way to attract and retain top talent while ensuring your workforce has access to the care they need to live healthy lives. Also known as group health insurance, small businesses can enroll in small business insurance so their employees can gain access to healthcare as one of their employee benefits. To better understand what your small business health insurance options are in Texas, you can turn to the Healthcare.gov search engine.

Health insurance basics in Texas

The Lone Star state is home to over 3.2 million small businesses, which means many Texans rely on these businesses for income and potentially benefits like health insurance (Texas Economic Development & Tourism). Texas employers need to comply with federal regulations when deciding if they are required to provide their employees with a health insurance plan. The good news is, if the Texas small business has less than 50 full-time employees or full-time equivalent, they aren’t required to do so.

Finding the right small business health insurance plan

When it comes time to choose a health insurance plan for your small business, you will need to think critically about the provider and plan type that can meet the unique needs of your business and workforce. It can be helpful to take employee needs, network size, and coverage options into account — as well as health insurance pricing considerations. Your desired premiums, deductibles, and copays can affect your spending (which can vary by company).

If you’re looking to save on your health insurance spending, you can see if you are eligible for the Small Business Health Care Tax Credit. If your business qualifies for this tax credit, you can earn a tax credit of up to 50% (this caps out at 35% for non-profit employers). To qualify for this tax credit, your business must meet these standards:

• Enroll in a Small Business Health Options Program (SHOP) plan

• Your workforce consists of fewer than 25 full-time equivalent (FTE) employees

• The average annual salary for your employees is $56,000 or below

• You contribute at least half of the premium costs for your full-time employees

• You offer SHOP coverage to all your full-time staff (there is no obligation to include dependents or employees working fewer than 30 hours per week for tax credit eligibility)

Types of Health Insurance Plans

When it comes to selecting health insurance for your small business, you'll find a variety of plan options available to you. Understanding the differences can help you choose the best coverage for your team.

Health Maintenance Organization (HMO) plans are a popular choice among employers. These plans usually have lower premiums but require employees to use a network of doctors and hospitals. An HMO plan typically requires employees to select a primary care physician (PCP) who will coordinate all their healthcare services, including referrals to specialists.

Preferred Provider Organization (PPO) plans offer more flexibility than HMO plans. Employees can see any healthcare provider within the plan’s network without needing a referral. Although these plans have higher premiums and out-of-pocket costs, the flexibility makes PPOs appealing to businesses with employees who might need specialized care.

Exclusive Provider Organization (EPO) plans operate similarly to HMOs but without the need for a referral to see a specialist. However, EPOs require members to use the network's providers exclusively, offering lower premiums in return for reduced choice in providers.

Point of Service (POS) plans combine elements of both HMO and PPO plans. Employees choose a primary care physician and need referrals to see specialists, but unlike HMO plans, POS plans allow for some out-of-network coverage, albeit at a higher cost.

High-Deductible Health Plans (HDHPs) paired with Health Savings Accounts (HSAs) are another option. These plans have lower premiums and higher deductibles, making them suitable for younger, healthier employees who don’t anticipate needing much medical care. The HSA, funded by both employer and employee contributions, allows employees to save money tax-free for medical expenses.

Indemnity Plans, also known as fee-for-service plans, offer the most freedom when selecting healthcare providers but come with the highest costs. These plans are less common due to their expense but might be suitable for companies whose employees require extensive and varied medical services.

One innovative option available to Texas small businesses is the Individual Coverage Health Reimbursement Arrangement (ICHRA). ICHRAs allow employers to reimburse employees on a pre-tax basis for individual health insurance premiums and other out-of-pocket medical expenses. This can be a cost-effective choice, giving employees the flexibility to select coverage that best meets their needs.

Understanding these various health insurance plans allows you to better navigate the Texas health insurance market to find the best options for your small business. Consider the specific needs of your employees, your budget, and the level of flexibility you wish to provide when making your selection.

How to enroll in small business health insurance

You can work with a SHOP-registered agent or broker to enroll your Texas business in a small business health insurance plan. The catch is, your business must have no more than 50 employees in order to be eligible for this plan type. The good news is, there is no Open Enrollment Period. You can enroll in a SHOP plan whenever it works best for your business.

Federal health insurance regulations

There are quite a few federal health insurance regulations you need to be aware of when enrolling your business in a small business health insurance plan. To help you jumpstart your research, these are some must-know regulations from the Affordable Care Act:

• You can sign up for SHOP through a private insurance provider and a SHOP-registered agent or broker can help you with the enrollment process and finding affordable health insurance in Texas

• Your business must choose a SHOP plan to be eligible for the Small Business Health Care Tax Credit

• When you offer health insurance to employees, it must be available to all eligible employees

• Employees can only contribute up to the IRS's annual dollar limit to their Flexible Spending Accounts

Legal obligations of small business owners

Texas business owners may need to meet certain legal obligations regarding the health insurance coverage they offer to their employees. One example of such a regulation, is that certain businesses who employ 50 or more full-time or full-time equivalent employees may need to make an Employer Shared Responsibility (ESRP) payment. This rule states that eligible employers must provide health insurance to their full-time workers and dependents that meet a certain set of standards. If the business fails to comply with these regulations, they may have to make an ESRP tax payment.

Managing small business health insurance

There are two common issues that small businesses tend to run into when navigating employee health insurance benefits. Compliance is one such issue. To make managing your small business health insurance plan a more straightforward process, it can be helpful to create a plan for regularly staying up-to-date on any state laws and regulations relating to small business health insurance. Remaining compliant with these rules can help you avoid running into tricky issues down the road.

It can also be challenging to ensure your employees understand what their healthcare benefits include and how they can access them. Making employee education a priority through efforts such as educational newsletters, promotional pamphlets, and workshops, can make all the difference and increase employee plan participation and utilization.

This is especially important if you manage employees in many different states besides Texas, such as Florida or Georgia.

Resources and support

A little over 16% of Texans go without access to healthcare (United States Census Bureau). If your small business can provide this benefit, you may be helping your employees greatly. Understandably, you may feel overwhelmed by starting the process of finding the right healthcare provider and plan for your employees. For more help finding the best health insurance for small business in Texas, you can turn to the following resources:

• Thatch: Request a free demo with Thatch to find out how you can save an average of $1,620 per employee each year

• Healthcare.gov: Learn more about your Small Business Health Options Program (SHOP) coverage options