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Best Health Insurance Companies for Small Businesses
Blue Cross Blue Shield shines for availability and its wellness programs
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When it comes to health insurance coverage, a small business is generally considered an employer with one to 50 employees, excluding the owner, their spouse, and any family members. However, some states and private companies include businesses with one to 100 employees in their definition of a small business. You can use the Small Business Health Insurance Options Program (SHOP) to find ACA-compliant group plans, which you can offer to employees by purchasing coverage with help from an agent or broker. A SHOP plan is the only way to qualify for the Small Business Health Care Tax Credit if you meet the eligibility requirements. If you can’t find a plan on the SHOP marketplace, you can find one directly through insurance company websites.
If you offer SHOP coverage, you must offer it to all full-time employees and have an office or worksite in the state where you’re applying for coverage. Not all providers offer SHOP plans, and they may not be available everywhere. Whether you decide to enroll in a SHOP plan or another group health insurance plan, you’ll want to choose a reputable company that prioritizes your employees and their healthcare needs. We evaluated companies based on the benefits they provide and their third-party ratings, so you can choose the right health insurance partner for your small business.
- Best Overall: Blue Cross Blue Shield
- Best for Telemedicine: Oscar
- Best for Customer Satisfaction: Kaiser Permanente
- Best for Extra Benefits: UnitedHealthcare
- Best Self-Insured Plans: Aetna
- Our Top Picks
Blue Cross Blue Shield
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Methodology, best overall : blue cross blue shield.
Wide provider network
Offers a variety of workplace wellness programs
Blue365 provides employees with discounts on health products and services
J.D. Power rating varies by region
With coverage in every U.S. ZIP code and a variety of national networks to choose from, Blue Cross Blue Shield can meet the needs of almost any business. The company was also our top pick for the best health insurance provider overall. But since BCBS is a group of companies, benefits vary by region, as do customer satisfaction ratings. It’s important to evaluate your BCBS company for issues like customer complaints.
BCBS workplace wellness programs vary by state, but as an example, BCBS Mississippi trains company leaders to teach fitness classes, and offers a significant reduction in health insurance premiums for employees who commit to working out at least twice per week. Other benefit offerings vary by region as well, but Anthem offers 24/7 virtual care, a convenient mobile app, a variety of plan types, and the option to bundle health coverage with dental, vision, life, and/or disability insurance. And the Blue365 discount program provides your employees with robust discounts on wellness-related products and services.
Best for Telemedicine : Oscar
$0 virtual urgent care available 24/7
Access to Cigna’s network with no referrals needed
A convenient mobile app with rewards for walking
Limited geographical availability
Oscar makes it easy for your employees to request virtual care from a convenient mobile app, and with most plans, there’s no cost to talk to a doctor online. Employees can also use the app to refill their prescriptions, message their care team, track their deductibles, and even get rewarded for meeting their step goals. What’s more, Oscar has partnered with Cigna to give members access to the company’s national and local provider networks. You can give your employees two network options, both of which don’t require specialist referrals and which include the Cigna Behavioral Health Network.
However, availability is limited to a few different states, cities, and metro areas: Georgia, Tennessee, Connecticut, select Arizona counties, select California counties, the Philadelphia metro area, Kansas City, Chicago, and St. Louis.
Best for Customer Satisfaction : Kaiser Permanente
Ranked highly by J.D. Power for customer satisfaction
4.3-star NCQA rating
Administers health payment accounts (HRA, HSA, or FSA) for deductible plans
Offers complementary care, vision, and dental plans
Kaiser Permanente received the best third-party member experience ratings of any insurer we reviewed. Its average NCQA rating is 4.3 stars (higher than all other providers). And it came in first for customer satisfaction in five of 22 regions—this is significant because it’s only available in eight states and Washington D.C. What’s more, Kaiser offers a range of health plan options, from PPO plans to deductible HMOs that can be paired with a health savings account or health reimbursement arrangement. And it’s affordable to add extra benefits for your employees, which include not only dental and vision, but also complementary care, such as acupuncture and chiropractic.
However, Kaiser Permanente plans are only available in California, Colorado, Georgia, Hawaii, Maryland, Virginia, Oregon, Washington, and the District of Columbia. And while the company provides resources and support for establishing a workplace wellness program, Kaiser is less hands-on than some Blue Cross Blue Shield companies when it comes to specific workplace programs. The company does, however, offer a variety of fitness discounts, and members can speak with a wellness coach at no cost.
Best for Extra Benefits : UnitedHealthcare
Offers a variety of extra benefits beyond just vision and dental
Offers options for part-time and seasonal workers
A+ (Superior) financial strength rating with AM Best
Customer satisfaction varies by region
UnitedHealthcare allows you to offer employees a variety of choices for plan types. It even provides bundled savings when you choose to offer additional coverage, such as vision, dental, hearing, and disability and absence benefits, plus supplemental, pet, and life insurance benefits. UnitedHealthcare also offers a unique program designed for part-time and seasonal workers, which is the only such program available nationwide. Level-funded and fully insured options are available for traditional major medical coverage, and a lower-cost, level-funded, limited minimum essential coverage option is also available. In addition, UHC offers a variety of workplace wellness programs, including a no-cost virtual weight loss program and rewards for physical activity. Group health plans include a discount program as well.
UnitedHealthcare also boasts relatively strong third-party ratings, with an average NCQA rating of 3.5 stars and an A+ (Superior) financial strength rating from AM Best, the highest grade of any of the featured providers on this list. However, the company’s customer satisfaction rating in the J.D. Power 2022 U.S. Commercial Member Health Plan Study varies by region. For example, the company was ranked lowest (out of seven providers) in Florida, but ranked second in the Heartland.
Best Self-Insured Plans : Aetna
Offers self-insured funding options
Offers a suite of more than 70 wellness programs
Dedicated support for new business onboarding
$0 MinuteClinic copays for self-insured members
MinuteClinic benefits not available to fully-insured groups in some states
If you’re looking for more plan flexibility and the possibility of greater savings, Aetna is our top pick for self-insured funding options. Self-funding with Aetna can save you as much as 25% on monthly costs, plus the insurer returns 50% of the surplus to your business. At the same time, stop-loss insurance protects you from unaffordable costs. HSA accounts are also available to employees, as are $0 copays for many MinuteClinic services. Just keep in mind that some fully-insured groups don’t get the same benefits.
Aetna also offers a suite of tools to members of self-insured plans, including a convenient mobile app that can provide rewards for reaching personalized goals, virtual care through Teladoc, and virtual fitness classes. The company also has an A (Excellent) financial strength rating with AM Best, and an average 3.3 NCQA star rating for its commercial plans, which indicates above-average member satisfaction. You can get group dental coverage through the provider as well. But Aetna’s group plans aren’t available everywhere.
Bear in mind that if you opt for self-insurance, you’ll be subject to IRS reporting requirements , regardless of your business size.
Blue Cross Blue Shield was our top pick all-around, and will be an especially good choice in regions where BCBS has high customer satisfaction ratings, robust workplace wellness programs, and other benefits. But if a convenient app with easy access to virtual care is most important to your employees, you may want to go with Oscar. And if you want the best customer experience for your employees, Kaiser is an excellent choice.
We recommend Aetna for small businesses pursuing self-insurance, and UnitedHealthcare is the best option for businesses that want the most extensive benefits package, especially those who want options for their variable-hour employees. Your budget and location may also limit your choices, but our top picks are all reputable providers that offer good coverage.
Frequently Asked Questions
How do i get health insurance for a small business.
If you’re self-employed, check the best health insurance companies for self-employed workers. Otherwise, you have a couple of options: The first is to work directly with a private insurer to get a fully-insured or self-funded plan. The second is to compare plans offered through the Small Business Health Insurance Options Program (SHOP), and to purchase coverage directly or with help from a broker.
While this program offers robust options in some states, others have limited or no plans available. Generally, getting SHOP coverage is the only way to claim the Small Business Health Care Tax Credit, which could save you up to 50% on your premium contributions. You must meet other eligibility requirements as well.
Do Small Businesses Have to Provide Health Insurance?
No employer is required to offer health coverage for its employees, but companies with at least 50 employees that do not offer health coverage are subject to the Employer Shared Responsibility Payment. If you choose to offer health insurance coverage to your full-time employees, you must offer it to all full-time employees once they become eligible, and there is a 90-day maximum waiting period.
How Much Does Small Business Health Insurance Cost?
Your total cost will depend on several factors, including the location of your business and the type of network you choose. In 2021, businesses with fewer than 200 employees spent an average of $6,569 per employee on annual health insurance premiums for single coverage and $14,094 for family coverage. Experts generally recommend keeping group health insurance costs between 10% and 20% of your annual revenue.
What Is a Self-Insured Health Plan?
A self-insured health plan is a type of group health insurance in which the employer collects premiums and is responsible for paying claims when employees need care. These plans can be self-administered, or the business may work with an insurance provider to get stop-loss coverage and administrative support.
There are several benefits to self-funded plans. Employers can keep surplus premiums (or receive a portion returned by the stop-loss carrier), plans can be customized to a greater degree, and certain ACA provisions that lead to high costs can be avoided. Increasingly, small businesses are opting for self-funded coverage. But self-insured plans aren’t right for every business.
We compared the largest health insurers nationwide and considered criteria in the following categories to determine the best health insurance companies for small businesses.
- Customer satisfaction : We used NCQA ratings and performance in the J.D. Power U.S. Commercial Member Health Plan Study to measure this criteria.
- State availability : This measure indicates how widely available plans are across the U.S.
- Plan features: For each company, we researched the types of plans available, plan features and benefits, the provider network, available wellness programs, and discounts.
- Types of employees covered: We considered whether coverage is available for full-time, part-time, and seasonal workers.
- Accessibility : We considered how easy it is for members to navigate plan services.
J.D. Power. “ 2022 U.S. Commercial Member Health Plan Study .”
KFF. “ Section 6: Worker and Employer Contributions for Premiums .”
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Self-employed health insurance
When you’re self-employed, your time can feel stretched. Choosing a health plan is simpler with UnitedHealthcare, so it won’t take up a lot of your time. With a large network of providers and easy-to-use tools and resources, you can quickly sort through the details and find a plan that works for you.
If you’re self-employed and have no employees, take a look at individual plans underwritten by Golden Rule Insurance Company, a UnitedHealthcare company. Options include short term plans 1 that offer coverage for 1 to nearly 12 months in some states, 2 TriTerm Medical health insurance that offers coverage lasting nearly 3 years 3 and more.
Looking for Health Insurance Marketplace coverage from UnitedHealthcare?
UnitedHealthcare Exchange plans offer a variety of affordable, reliable coverage options. You can find plans available in your area at UnitedHealthcare Exchange plans or you can call 1-800-806-0451 TTY 711.
If you’re looking for ACA plans in New York or Massachusetts, visit Healthcare.gov or call 1-844-joinUHC to learn about plans available near you.
Save money on your self-employed benefits
The Affordable Care Act now allows a self-employed health insurance deduction on premiums of 100%, meaning that you can reduce your adjusted gross income by the total amount of health insurance premiums you pay in a calendar year.
Health insurance for small business
If you are self-employed but have employees working for you, whether it is a small staff or team of up to 99, you are considered a small business. Choose from a great set of options, made to work for your small business.
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Health insurance support for small business
We’re here for you — helping you balance quality and cost control with health insurance plans and unique funding created exclusively for small group needs.
Plan support and savings
Digital enrollment tools.
Help your clients manage enrollment and benefits administration with our flexible tools.
- Springboard Marketplace
Health plan savings
Learn about government credits to help you offset the cost of employee health benefits.
Self-insured funding built for small businesses
Control rising health care costs with Aetna Funding Advantage SM health plans. You can get the benefits typical for larger groups like surplus sharing, fewer taxes and fees and high-cost claims protection. All in one offering specially designed with your small business in mind.
A monthly payment based on the health trends of your employees — for up to 25 percent savings up front.
Online benefits shopping, enrollment, administration and other simple features for you and your employees.
Stop-loss insurance to limit the risk of high-cost claims, with money back when claims are lower.
Plan designs that provide access to Aetna’s quality, value-based network plus health and wellness benefits.
- Explore Aetna Funding Advantage benefits
A value-added package
You’ve come to the right place to balance health plan costs and quality. Explore competitive benefits, unique funding and stable cost control – with built-in wellness programs and resources to support employee health and well-being long term.
Get lower monthly payments based on health trends, low-cost local network options and 50% of any surplus returned to you at year end when you renew your plan.
Keep your costs predictable and stable with bundled products, funding options, wellness offerings, stop-loss claims protection and more.
Make life easy with a national portfolio of health insurance plan designs, online shopping and benefits administration and one common support model.
Get the job done fast with quick, accurate quoting, auto-case installation, online self-service, fixed national plan designs and more.
We’ve got the perfect fully insured plan for you
Our health benefits and insurance plans are as unique as your small business, with service in markets all across the country. So it’s easy to find quality plans offered in your state.
Public exchange options are also available in selected states through our Small Business Health Options Program (SHOP) coverage .
Everyone saves with health expense funds
As part of a consumer-directed plan, health expense funds benefit employers and employees alike. You get tax savings from salary deductions. And employees get quality care that encourages smart spending.
You can also:
- Cut FICA, unemployment and workers’ comp taxes by lowering payroll taxes
- Offer innovative plans to set aside tax-free money, like for dependent care or parking expenses
- Enhance company benefits package to attract and keep valuable employees
Are you a broker or producer?
You can find small group solutions and sales tools on our Producer World ® website.
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Each main plan type has more than one subtype. Some subtypes have five tiers of coverage. Others have four tiers, three tiers or two tiers. This search will use the five-tier subtype. It will show you whether a drug is covered or not covered, but the tier information may not be the same as it is for your specific plan. Do you want to continue?
Applied Behavior Analysis Medical Necessity Guide
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The Applied Behavior Analysis (ABA) Medical Necessity Guide helps determine appropriate (medically necessary) levels and types of care for patients in need of evaluation and treatment for behavioral health conditions. The ABA Medical Necessity Guide does not constitute medical advice. Treating providers are solely responsible for medical advice and treatment of members. Members should discuss any matters related to their coverage or condition with their treating provider.
Each benefit plan defines which services are covered, which are excluded, and which are subject to dollar caps or other limits. Members and their providers will need to consult the member's benefit plan to determine if there are any exclusions or other benefit limitations applicable to this service or supply.
The conclusion that a particular service or supply is medically necessary does not constitute a representation or warranty that this service or supply is covered (i.e., will be paid for by Aetna) for a particular member. The member's benefit plan determines coverage. Some plans exclude coverage for services or supplies that Aetna considers medically necessary.
Please note also that the ABA Medical Necessity Guide may be updated and are, therefore, subject to change.
Medical necessity determinations in connection with coverage decisions are made on a case-by-case basis. In the event that a member disagrees with a coverage determination, member may be eligible for the right to an internal appeal and/or an independent external appeal in accordance with applicable federal or state law.
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Copyright 2015 by the American Society of Addiction Medicine. Reprinted with permission. No third party may copy this document in whole or in part in any format or medium without the prior written consent of ASAM.
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- The term precertification here means the utilization review process to determine whether the requested service, procedure, prescription drug or medical device meets the company's clinical criteria for coverage. It does not mean precertification as defined by Texas law, as a reliable representation of payment of care or services to fully insured HMO and PPO members.
- Applies to: Aetna Choice ® POS, Aetna Choice POS II, Aetna Medicare ℠ Plan (PPO), Aetna Medicare Plan (HMO), all Aetna HealthFund ® products, Aetna Health Network Only ℠ , Aetna Health Network Option ℠ , Aetna Open Access ® Elect Choice ® , Aetna Open Access HMO, Aetna Open Access Managed Choice ® , Open Access Aetna Select ℠ , Elect Choice, HMO, Managed Choice POS, Open Choice ® , Quality Point-of-Service ® (QPOS ® ), and Aetna Select ℠ benefits plans and all products that may include the Aexcel ® , Choose and Save ℠ , Aetna Performance Network or Savings Plus networks. Not all plans are offered in all service areas.
- All services deemed "never effective" are excluded from coverage. Aetna defines a service as "never effective" when it is not recognized according to professional standards of safety and effectiveness in the United States for diagnosis, care or treatment. Visit the secure website, available through www.aetna.com, for more information. Click on "Claims," "CPT/HCPCS Coding Tool," "Clinical Policy Code Search."
- The five character codes included in the Aetna Precertification Code Search Tool are obtained from Current Procedural Terminology (CPT ® ), copyright 2022 by the American Medical Association (AMA). CPT is developed by the AMA as a listing of descriptive terms and five character identifying codes and modifiers for reporting medical services and procedures performed by physicians.
- The responsibility for the content of Aetna Precertification Code Search Tool is with Aetna and no endorsement by the AMA is intended or should be implied. The AMA disclaims responsibility for any consequences or liability attributable or related to any use, nonuse or interpretation of information contained in Aetna Precertification Code Search Tool. No fee schedules, basic unit values, relative value guides, conversion factors or scales are included in any part of CPT. Any use of CPT outside of Aetna Precertification Code Search Tool should refer to the most Current Procedural Terminology which contains the complete and most current listing of CPT codes and descriptive terms. Applicable FARS/DFARS apply.
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Dental clinical policy bulletins
- Aetna Dental Clinical Policy Bulletins (DCPBs) are developed to assist in administering plan benefits and do not constitute dental advice. Treating providers are solely responsible for dental advice and treatment of members. Members should discuss any Dental Clinical Policy Bulletin (DCPB) related to their coverage or condition with their treating provider.
- While the Dental Clinical Policy Bulletins (DCPBs) are developed to assist in administering plan benefits, they do not constitute a description of plan benefits. The Dental Clinical Policy Bulletins (DCPBs) describe Aetna's current determinations of whether certain services or supplies are medically necessary, based upon a review of available clinical information. Each benefit plan defines which services are covered, which are excluded, and which are subject to dollar caps or other limits. Members and their providers will need to consult the member's benefit plan to determine if there are any exclusions or other benefit limitations applicable to this service or supply. Aetna's conclusion that a particular service or supply is medically necessary does not constitute a representation or warranty that this service or supply is covered (i.e., will be paid for by Aetna). Your benefits plan determines coverage. Some plans exclude coverage for services or supplies that Aetna considers medically necessary. If there is a discrepancy between this policy and a member's plan of benefits, the benefits plan will govern. In addition, coverage may be mandated by applicable legal requirements of a State or the Federal government.
- Please note also that Dental Clinical Policy Bulletins (DCPBs) are regularly updated and are therefore subject to change.
- Since Dental Clinical Policy Bulletins (DCPBs) can be highly technical and are designed to be used by our professional staff in making clinical determinations in connection with coverage decisions, members should review these Bulletins with their providers so they may fully understand our policies.
- Under certain plans, if more than one service can be used to treat a covered person's dental condition, Aetna may decide to authorize coverage only for a less costly covered service provided that certain terms are met.
Medical clinical policy bulletins
- Aetna Clinical Policy Bulletins (CPBs) are developed to assist in administering plan benefits and do not constitute medical advice. Treating providers are solely responsible for medical advice and treatment of members. Members should discuss any Clinical Policy Bulletin (CPB) related to their coverage or condition with their treating provider.
- While the Clinical Policy Bulletins (CPBs) are developed to assist in administering plan benefits, they do not constitute a description of plan benefits. The Clinical Policy Bulletins (CPBs) express Aetna's determination of whether certain services or supplies are medically necessary, experimental and investigational, or cosmetic. Aetna has reached these conclusions based upon a review of currently available clinical information (including clinical outcome studies in the peer-reviewed published medical literature, regulatory status of the technology, evidence-based guidelines of public health and health research agencies, evidence-based guidelines and positions of leading national health professional organizations, views of physicians practicing in relevant clinical areas, and other relevant factors).
- Aetna makes no representations and accepts no liability with respect to the content of any external information cited or relied upon in the Clinical Policy Bulletins (CPBs). The discussion, analysis, conclusions and positions reflected in the Clinical Policy Bulletins (CPBs), including any reference to a specific provider, product, process or service by name, trademark, manufacturer, constitute Aetna's opinion and are made without any intent to defame. Aetna expressly reserves the right to revise these conclusions as clinical information changes, and welcomes further relevant information including correction of any factual error.
- CPBs include references to standard HIPAA compliant code sets to assist with search functions and to facilitate billing and payment for covered services. New and revised codes are added to the CPBs as they are updated. When billing, you must use the most appropriate code as of the effective date of the submission. Unlisted, unspecified and nonspecific codes should be avoided.
- Each benefit plan defines which services are covered, which are excluded, and which are subject to dollar caps or other limits. Members and their providers will need to consult the member's benefit plan to determine if there are any exclusions or other benefit limitations applicable to this service or supply. The conclusion that a particular service or supply is medically necessary does not constitute a representation or warranty that this service or supply is covered (i.e., will be paid for by Aetna) for a particular member. The member's benefit plan determines coverage. Some plans exclude coverage for services or supplies that Aetna considers medically necessary. If there is a discrepancy between a Clinical Policy Bulletin (CPB) and a member's plan of benefits, the benefits plan will govern.
- In addition, coverage may be mandated by applicable legal requirements of a State, the Federal government or CMS for Medicare and Medicaid members.
See CMS's Medicare Coverage Center
- Please note also that Clinical Policy Bulletins (CPBs) are regularly updated and are therefore subject to change.
- Since Clinical Policy Bulletins (CPBs) can be highly technical and are designed to be used by our professional staff in making clinical determinations in connection with coverage decisions, members should review these Bulletins with their providers so they may fully understand our policies.
- While Clinical Policy Bulletins (CPBs) define Aetna's clinical policy, medical necessity determinations in connection with coverage decisions are made on a case by case basis. In the event that a member disagrees with a coverage determination, Aetna provides its members with the right to appeal the decision. In addition, a member may have an opportunity for an independent external review of coverage denials based on medical necessity or regarding the experimental and investigational status when the service or supply in question for which the member is financially responsible is $500 or greater. However, applicable state mandates will take precedence with respect to fully insured plans and self-funded non-ERISA (e.g., government, school boards, church) plans.
See Aetna's External Review Program
- The five character codes included in the Aetna Clinical Policy Bulletins (CPBs) are obtained from Current Procedural Terminology (CPT®), copyright 2015 by the American Medical Association (AMA). CPT is developed by the AMA as a listing of descriptive terms and five character identifying codes and modifiers for reporting medical services and procedures performed by physicians.
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- Arrow Right See SHOP plans & prices
- Arrow Right Find an agent and broker
- Arrow Right See if you're eligible
How to enroll in SHOP insurance
Find out if your small business qualifies for shop, 1. have 1-50 full-time equivalent employees (ftes).
- Use the FTE Calculator to find out if you qualify.
- To qualify for SHOP, you must have at least 1 FTE employee other than owners, spouses, and family members of owners, and partners.
2. Offer coverage to all full-time employees
- Full-time employees generally work 30 or more hours per week.
- You don ’t have to offer coverage to part-time employees — those averaging less than 30 hours per week — or seasonal workers. (But, you can offer coverage to part-time employees if you choose.)
3. Enroll at least 70% of the employees you offer insurance to
- Use the SHOP Minimum Participation Rate (MPR) Calculator to check how many of your employees must accept.
- Some states have different minimum participation requirements. Find out if your state has a different MPR .
- You don’t have to meet the minimum participation requirement between November 15 - December 15 any year.
- Employees with other health coverage aren't counted as “rejecting” your offer.
4. Have an office or employee work site within the state whose SHOP you want to use
- Learn how to access SHOP insurance in your state. We’ll show you next steps.
- Find out what to do if your business operates in multiple states .
- Review all SHOP tools, calculators, fact sheets, how-to guides, videos, and other resources for employers .
- Contact the SHOP Call Center at 1-800-706-7893 (TTY: 1-888-201-6445).
Do some states let businesses with more than 50 employees to participate in SHOP? Open
What if i currently offer shop insurance and my business grows to more than 50 employees open, how do i know my state’s minimum participation rate open.
- Louisiana: 75%
- Mississippi: 0%
- New Hampshire: 75%
- South Dakota: 75%
- Tennessee: 50%
Health insurance for small business owners - cost & tax tips
Small business owners can have a lot of trouble when it comes to health insurance. Thankfully, many insurance options cater to small business owners .
Here's a rundown of the best options for health insurance for small business owners. We'll also cover the deductions or credits that can help offset the costs.
How to get health insurance for small business owners
Options for health insurance for small business owners depend on the size of your business . Solopreneurs can get coverage from the following sources:
- Individual marketplace. Choose this option to buy an individual plan through healthcare.gov. You may be eligible for premium tax credits depending on your income and location.
- Private individual plan. Many major health insurance carriers sell individual plans directly to individuals. You won't be eligible for government health insurance premium subsidies with this.
- Trade association plan. Professional trade associations allow members to buy into a group health insurance plans. This can potentially save versus private individual plans.
- Medicare. Medicare provides health insurance coverage for seniors. Your age and Medicare tax contribution history will determine whether you qualify for this.
Multi-person businesses can get health insurance for small business owners from the sources below:
- Qualified Small Employer Health Reimbursement Arrangement (QSEHRA). With a QSEHRA, a small business allocates a monthly healthcare allowance for each employee. Then, they reimburse each employee for healthcare expenses when the employee submits proof of the expenditures. Businesses must have fewer than 50 employees to qualify.
- Small Business Health Insurance Program (SHOP) marketplace: You must operate a small business within the state in which you want to offer a SHOP plan and your business must have 1 to 50 full-time employees (other than you or a spouse, family member or owner) to be eligible for a plan. You must offer the SHOP coverage to all full-time employees, and at least 70 percent must enroll.
- Private group plan: Many major health insurance carriers sell group policies to businesses of varying sizes.
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How much do small business owners pay for health insurance?
The cost of obtaining healthcare insurance for yourself and any employees depends on the age, location, and size of the workforce. It also depends on what, if any, premium cost-sharing arrangement you made with your employees to reduce your costs.
But according to PeopleKeep , small businesses with fewer than 200 employees annually paid roughly $6,480 per employee for single coverage premiums and $17,616 per employee for family coverage premiums in 2017. They spent another $13,000 annually in plan administrative costs.
You'll also have to factor in the cost of hiring a part- or full-time benefits administrator, if you choose to hire one, to handle plan selection, price negotiation, plan enrollment and compliance. If you decide to oversee the plan yourself, factor in how much time it would take you to manage the plan throughout the year and translate that into opportunity cost .
Can I deduct health insurance as a small business owner?
Yes; many entrepreneurs enrolled in a qualifying health insurance plan for small business owners qualify for one or more health insurance tax deductions or credits . These include the:
- Self-employed health insurance deduction: You can generally deduct 100 percent of the premiums you pay for health, dental and long-term health coverage for yourself, your spouse and any dependents aged 26 or younger if you qualify for this health insurance deduction . To qualify, you must have been a self-employed worker with a net profit, a partner who received income on K-1, an individual who used one of the IRS-defined optional methods to figure your self-employment tax or you received wages from an S corporation in which you were a shareholder who held more than 2 percent of shares.
- Small business health care tax credit: You are eligible for this credit that amounts to 50 percent of the costs you pay for your employees' premiums (35 percent for non-profit employers) if you offer a SHOP plan. But you must have fewer than 25 full-time employees (each making $50,000 or less), and you must cover 50 percent or more of your full-time employees' premium costs.
- HSA deduction: If the plan you enroll in is eligible for a health savings account (HSA), and you contribute to that HSA account, your contributions are also deductible (up to $3,450 for an individual or $6,850 for a family in 2018). Usually, only high-deductible healthcare plans come with health savings accounts.
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As a small business owner, am I required to offer health insurance to my employees?
If your business qualifies as small (fewer than 50 full-time employees and full-time equivalents FTEs), you are not required to offer coverage.
If you’re self-employed , you can sign up for coverage for yourself (and family members) through the Health Insurance Marketplace®.
Small business owners who want to offer health insurance coverage have options such as:
- Small Business Health Options Program (SHOP)
- Health reimbursement arrangements (HRAs)
- Health Savings Accounts and health plans with tax-saving benefits
Learn more about SHOP and other ways to offer health insurance to your employees
Have questions about SHOP coverage for businesses with 50 or fewer employees? Contact the SHOP Call Center at 1-800-706-7893 (TTY users can call 1-888-201-6445).
Hours: Monday through Friday, 9 a.m. to 5 p.m. EST.
Note: Businesses with over 50 employees may have to make what’s called a Shared Responsibility Payment . This payment may be required if they do not offer coverage that meets certain standards.
Search HHS FAQs by questions or keywords:
What small business owners need to know about Medicare now
Baby Boomers own a lot of small businesses.
In fact, according to the US Census Bureau, over half of small business owners are over 55 years of age. That means that right now millions of them are being bombarded with ads and mail about Medicare plans because we are smack dab in the middle of the annual period to enroll in Medicare or change your plan between Oct.15 to Dec. 7.
So listen up: If you’re a small business owner, whether you’re approaching the age you can sign up for Medicare – 65 – or already on Medicare, now’s the time to think about your choice of Medicare plans and think carefully.
This choice can cost you or save you thousands, maybe tens of thousands, of dollars.
When does Medicare open enrollment take place? Here's what to know when picking your plan.
For context, it helps to understand that health insurance for small business owners – and their staff – is jaw-droppingly expensive. Before the Affordable Health Care Act was passed (Obamacare), small business owners over the ages of 50, even 40, were charged such high premiums that it was clear the insurance companies didn’t want us.
Personally, I went without health insurance until my mid-forties. Yes, I know it was stupid, but running a business was expensive. Once I hit 50, the premiums were always over a thousand dollars a month and then over $1,500 a month for lousy coverage.
The ACA changed that. Somewhat. Now, a 55-year-old in California making $50,000 a year can get a “Silver” plan for only $321 a month, and someone making $150,000 a year would pay only $856 for that plan.
If you think the word “only” shouldn’t apply for a monthly premium that high, believe me many older small business owners consider that a bargain.
That’s why many small business owners are thrilled when they qualify for Medicare. It’s about the only benefit of getting older. But it’s a big one.
Yet it can also be confusing. There’s all kinds of terms that sound the same – Medicare, Medigap, Medicare Advantage, Supplemental plans, and on and on.
Let’s start with the basics.
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The government program that provides coverage for basic health care. There are different parts to this Original Medicare:
- Part A covers the really expensive stuff: hospitals, skilled nursing, surgery
- Part B covers preventative care, doctor visits, lab tests and so on.
- Part D covers prescription costs.
But Medicare doesn’t cover all the costs – you’ll still pay around 20% of your health care costs, which can be substantial. You’ll also pay the government a premium for Part B. You can choose whether to buy Part D for additional cost.
Medigap or Supplement Insurance
Original Medicare still leaves significant costs and gaps in your coverage, so you can purchase a supplemental plan to lower your out-of-pocket expenses.
There are a number of different plans to choose from, some that cover virtually all of your expenses. Of course, the cost of your premiums increase as your coverage increases. There’s a good chart on the government’s website that compares the features of the different Supplement plans.
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What is a Medicare Advantage
Offered by private insurance companies, Medicare Advantage plans wrap basic Medicare benefits into one package. They have much lower premiums than Medigap/Supplement plans – some actually have no monthly premiums at all. But you are likely to have co-pays and a yearly deductible.
However, many of these plans offer a number of benefits not included in Supplement offerings, including dental and vision coverage, even gym membership.
What’s the big difference between Medigap and Medicare Advantage?
Advantage plans are cheaper than Medigap/Supplement plans – often a lot cheaper or even ‘free.’ But, of course, there’s a catch – and it’s a big one!
With a Medigap/Supplement plan, you can go to any doctor or hospital that accepts Medicare – anywhere in the US. And you don’t need a doctors’ referral to go to a specialist.
You want to go see a dermatologist or a podiatrist? Just make an appointment; no need to get the approval of your primary physician. And if you want to see a specialist in another state, you can. With some plans – including the most popular Plans F and G – you’ll have virtually no out-of-pocket co-pays or deductibles.
That’s not the case with Advantage programs. They act as HMO’s (Health Maintenance Organizations) or PPO’s (Preferred Provider Organizations). You must go to a doctor or hospital that is in your insurers’ specific “network,” and you must get a referral before going to a specialist.
Any services out-of-network or out of your local area are likely not to be covered. If you move, you may not be covered. You’ll have co-pays and out-of-pocket expenses for most services. Those costs can be huge.
Here's the most important thing to remember: The first year you qualify for Medicare, you can choose any plan you want without health considerations affecting your acceptance or pricing. Insurers can’t reject you because of pre-existing conditions.
Even better, you can keep that plan as long as you keep paying for it. If you choose a less expensive Advantage plan now, you can be rejected from a more comprehensive Supplement plan in the future.
Choosing a Medicare plan? Here are 7 things to consider
For example, let’s say Sam, who owns a graphic design firm, has just turned 65, and she’s signing up for Medicare. She’s had breast cancer. Thank goodness it’s in remission, but she wants to make sure she can see her own oncologist or go for treatment in another state if the cancer comes back.
She can afford the monthly premiums, so she chooses a Supplement plan – in her case, Plan “G,” that will cover all those costs. If she signs up now, when she’s first eligible, she can’t be rejected because of her cancer, and the insurance company can’t kick her off or raise her premiums in the future more than the standard amount set by the government.
However, another Sam, who owns a small car repair shop, has a few health issues and heart disease runs in his family. He’s struggled to pay for health care. He’s thrilled to sign up for an Advantage plan that has no monthly premiums. He also gets dental and vision coverage, and now can join that gym and work out.
But he has to choose a doctor in network, and if his doctor or hospital drops off his plan, he’ll have to find another doctor. More importantly, if he has heart problems in the future, he may face some high hospital bills, won’t be able to go to a specialist that is out-of-network, and is likely not to be able to switch to a more comprehensive Medigap/supplement plan.
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Here’s the other thing to keep in mind: Insurance brokers get paid more for signing you up for an advantage plan than for a Medigap/Supplement plan.
For 2022, for example, an agent could get up a commission up to $573 for a first-time Advantage enrollment (higher in some states, such as $715 in California) while the average commission for enrolling someone in a Supplement plan was $322. So when an insurance broker is urging you to sign up for an Advantage plan, keep in mind they’re going to make more money if you do .
What do I recommend?
- The year you qualify for Medicare, sign up for the best plan you can afford. Insurers can’t reject you because of pre-existing conditions.
- If you can afford one of the best and most popular Medigap/Supplement plans – Plan G or Plan F (Plan F is only available if you qualified for Medicare before 2020) – you’ll have the best coverage.
- If monthly health care premiums are your biggest concern, choose an Advantage plan. Just be aware of the limitations.
- Sign up for something! It’s better to have any plan rather than no plan.
- If you have a pre-existing condition or any condition that might require specialists or out-of-area doctors or hospitals, seriously consider a Supplement plan.
Don’t wait to sign up. Even if you can get health insurance from a spouse’s employer, sign up. Your costs may go up if you wait.
Also, some Republican legislators have expressed an intent to reduce Medicare benefits. If they control Congress and the White House after the 2024 election, I’d expect the age to sign up for Medicare to be increased, possibly to age 70. Those already on Medicare would likely be ‘grandfathered’ in.
I know it’s all a bit confusing, but Medicare is a great boon to small business owners who face some of the highest prices for health insurance. Don’t wait.
Correction: The original publication of this column misstated the proportion of health care costs not covered by Medicare. The correct figure is around 20%.
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October 31, 2023
How much is business insurance for a small business?
October 31, 2023 • Block Advisors
Small business insurance costs can vary widely. Your cost will depend on the type(s) of insurance you buy. This decision is not something to overlook as a small business owner. Business insurance is important for every small business, even one with few or no employees .
Business insurance reduces your financial liability for certain things like theft or property damage. If you’re just getting started as a small business owner you may be asking yourself how much business insurance should cost, or how you can lower your costs. We’ll answer these questions and more to ensure that you feel confident in your business insurance choices.
Average cost of small business insurance
The average cost of small business insurance largely depends on your unique situation. In general, the more coverage you need the more you will spend. Insurance policy coverage and expenses vary from company to company. The good news is that many types of small business insurance can be leveraged for a tax deduction . However, there are a few common types of insurance. Keep reading to learn about average insurance costs broken down by the type of small business insurance.
General liability insurance
General liability insurance offers financial protection from lawsuits and claims if your business is held responsible for someone’s injuries or damage to their property. Usually, general liability insurance averages around $300 – $400 a year .
Commercial property insurance
Commercial property insurance protects your small business from losses if your business property is stolen or damaged by a natural disaster , fire, or other problem. On average, commercial property insurance costs around $60 – $70 a year .
Workers’ compensation insurance
Workers’ compensation insurance helps employees who are injured while working. It typically pays for medical expenses, lost wages, and more. Workers’ compensation laws and tax guidelines vary from state by state. In most cases, you will be legally required to have this insurance if you have at least one employee. On average, it costs $800 – $900 a year .
Inland marine insurance
Inland marine insurance protects your company if something happens to your property or products while in transit. This type of insurance costs around $150-$175 a year . The median cost, though, may change depending on your business and coverage needs. More coverage will likely also cost more.
Business interruption insurance
Business interruption insurance helps your business replace income losses and pay operating expenses if your business must be temporarily closed due to circumstances covered by your policy. It generally averages between $450 – $1,500 a year.
Cyber liability insurance
Cyber liability insurance protects your company in the event of a cyberattack. This type of policy generally covers costs associated with getting your business back on track after a cyberattack, including any associated legal fees. Its average price is around $1500 – $1700 a year .
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What factors affect small business insurance costs?
Small business insurance ranges in price. The cost depends on several key factors – we’ve outlined a few of these factors below.
The industry your business operates in impacts your insurance costs. Some industries are inherently riskier than others. Higher risk leads to higher premiums.
The price of insurance types tied to business property varies by state and zip code. For example, a business in a rural area may have higher rates because fire departments are less accessible. However, a business in a high-traffic area may pay more in liability insurance. Your business’s location may also affect your workers’ compensation insurance cost.
Small business size
The number of employees your business has directly impacts the cost of your insurance. This is because with more employees comes more opportunities for injuries or accidents than when working alone or with a few others.
Payroll and sales
Your workers’ compensation insurance also depends on the size of your annual payroll . Insurers will also look at company revenue and sales (found on an income statement ) to determine the appropriate insurance policy.
If your business has a history of insurance claims, this could raise questions for insurers. They may see your business as naturally risky or feel that you aren’t taking the necessary steps to mitigate risks. Either way, it may affect your insurance costs.
Coverage and deductibles
How much your policy pays out if you file a claim impacts the overall cost of your small business insurance. Additionally, choosing a lower deductible may cause the price of your policy to rise. Selecting a policy with a higher deductible may help keep costs lower, but also means you’ll have to pay more out of pocket before insurance kicks in.
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6 ways to lower costs of business insurance
With all the different types of policies and varying costs, business insurance costs can add up. It may quickly feel overwhelming. Ultimately, one good way to minimize your costs is to make as few claims against your policy as possible. However, if you need to make a claim you shouldn’t be afraid to. After all, that’s why you have insurance.
There are other ways of keeping the costs of business insurance in check. Still, there are often trade-offs to be aware of. Speak with an insurance professional or business advisor who can help you understand your unique business situation. They may suggest one or more of the following tactics. Don’t forget many small business insurance costs are tax deductible !
Raise your deductible
If you’re looking to lower costs on business insurance, first consider adjusting your deductible. A lower deductible generally means you’ll pay higher insurance premiums but incur lower out-of-pocket costs when you end up needing to use insurance coverage. Raising the deductible usually results in lower premiums, but a higher out-of-pocket cost when a claim is filed. You can see how it may be risky to raise your deductible. It is wise to ensure your deductible amount is one you want and will be able to cover.
Cut unnecessary coverage
Most business owners have at least a blanket general liability insurance policy and required workers’ comp insurance – often there is a legally mandated minimum for these types of insurance. For the other insurance options, though, consider carefully if you really need the coverage. Do your research to understand your small business’ insurance needs.
Look for package deals
Many insurance providers will offer a discount if you purchase several policies at once. Bundled business owner plans may be less expensive than buying the policies individually.
Shop around first
Shop around at different insurance companies before making your final decision. Get quotes for your insurance needs from several places. Compare prices, coverage levels, customer service, and other factors to determine which will work bestyou’re your small business.
Reduce business risk
As mentioned, some industries are inherently riskier than others. But there are strategies to reduce your risk. Talk with insurance companies to see what can be done to prevent losses. Look into theft-prevention programs, build a disaster prevention plan, or seek out human resources training.
Seek out discounts
Don’t hesitate to ask insurance companies about possible discounts. Small businesses may be eligible for certain discounts. You may also come across safety and loyalty discounts. Some insurance companies even offer discounts if you pay in advance, typically if you buy 3, 6, or 12 months at a time.
Business insurance cost: guide for 2023
Business insurance can cost a hefty sum. But it’s one way to protect your company from costly damages and safeguard the hard work you’ve put into starting and operating your small business.
Deciding to get business insurance is just one of the challenges and responsibilities that come with owning a small business. The experts at Block Advisors can help you with other small business needs. From bookkeeping services and payroll to small business tax preparation , we’ve got your back.
Get assistance from a Block Advisors expert today.
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Smaller employers weigh a big-company fix for scarce primary care
- Phil Galewitz, KFF Health News
With his company’s health costs soaring and his workers struggling with high blood pressure and other medical conditions, Winston Griffin, CEO of Laurel Grocery Co., knew his company had to do something.
So the London, Kentucky, wholesaler opened a health clinic.
“Our margins are tiny, so every expense is important,” Griffin said. The clinic, he said, has helped lower the company’s health costs and reduce employee sick leave.
Large employers have run clinics for decades. At Laurel Grocery’s in-house clinic, workers can get checkups, blood tests, and other primary care needs fulfilled free, without leaving the workplace. But Griffin’s move is notable because of his company’s size: only about 250 employees.
Nationwide, a modest number of small- and medium-size employers have set up their own health clinics at or near their workplaces, according to surveys and interviews with corporate vendors and consulting firms that help employers open such facilities.
Improving employee health and lowering health costs are among the main advantages employers cite for running clinics. But some companies also say they’re helping to blunt the nation’s shortage of primary care doctors and eliminate the hassle of finding and getting care.
“Why did we do this? So my employees would not drop dead on the floor,” Griffin said. “We had such an unhealthy workforce, and drastic times called for drastic measures.”
KFF’s annual survey of workplace benefits this year found that about 20% of employers who offer health insurance and have 200 to 999 workers provide on-site or near-site clinics. That compares with 30% or better for employers with 1,000 or more workers.
Those figures have been relatively steady in recent years, surveys show.
And U.S. employers reported the biggest increase this year in annual family premiums for their sponsored health plans in a decade — an average jump of 7% to nearly $24,000, according to the KFF survey, released Oct. 18. That spike may intensify interest among business leaders in curbing underlying health costs, including by exploring delivering care at workplaces.
Employers don’t require their workers to use their clinics but typically provide incentives such as free or reduced copayments. Griffin offered employees $150 to get a physical at the clinic; 90% took advantage of the deal, he said.
Employer clinics could alleviate the rising demand for primary care. A far lower proportion of U.S. doctors are generalists than in other advanced economies, according to data compiled by the Peterson Center on Healthcare and KFF.
For patients, frustrating wait times are one result. A recent survey by a physician staffing firm found it now takes an average of three weeks to get in to see a family doctor.
In 2022, Franklin International, a manufacturer of adhesives in Columbus, Ohio, began offering its 450 workers the option to use local primary care clinics managed by Marathon Health, one of about a dozen companies that set up on-site or near-site health centers for employers.
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Franklin employees pay nothing at the clinics compared with a $50 copayment to see an outside doctor in their insurance network. So far about 30% of its workers use the Marathon clinics, said Doug Reys, Franklin’s manager of compensation benefits.
“We heard about the difficulty employees had to get in to a doctor,” he said. They would call providers who said they were accepting new patients but would still wait months for an appointment, he added.
At the Marathon clinics — which are shared by other employers — workers now can see a provider within a day, he said.
That’s good for employees — and for the company’s recruiting efforts. “It is a good benefit to say you can get free primary care,” Reys said.
Not all employers that have explored opening their own clinics have seen the value. In 2020, the agency that oversees health benefits for Wisconsin state employees opted against the on-site model after a review of experiences by similar agencies in Indiana and Kentucky found it didn’t save money or constrain health insurance premiums.
Kara Speer, national practice leader for consulting firm WTW, said potential cost savings from employer-run clinics can take years to accrue as employees shift from pricier hospital emergency rooms and urgent care clinics. And it can be difficult to measure whether clinics control costs by improving workers’ health through preventive screenings and checkups, she said.
Katie Vicars, a senior vice president at Marathon Health, said about 25% of its 250 clients are firms with fewer than 500 people. She said Marathon’s clinics help drive down costs and help employees get easier access to doctors who spend more time with them during appointments. Her company helps employers manage workers with chronic diseases better and redirects care from urgent care centers and ERs, she said.
Hospitals have also sought to get into the business of running on-site clinics for employers, but some potential clients question whether those health systems have incentives to funnel workers to their own hospitals and specialists.
At Laurel Grocery, Griffin said he knows many of his employees don’t regularly exercise and have poor diets — a reflection of the overall population in the region. Health screenings performed by a local hospital over the years found many residents with high cholesterol and high blood pressure. “Nothing tended to change,” he said.
Laurel Grocery contracts with a local hospital for about $100,000 a year to manage its clinic, including having a physician assistant on-site three days a week. Laurel Grocery does not have access to any employee health records.
He said the clinic has saved money by reducing unnecessary ER use and reducing hospitalizations. “It’s been way more successful than I thought it would” be, he said.
The clinic is about a three-minute walk from Kip Faulhaber’s office. Faulhaber, a senior vice president at Laurel Grocer who is 73, said he goes in every week for a vitamin B12 shot to treat a deficiency. He also turns to the clinic for an annual physical, vaccinations, and when he has a sinus infection but doesn’t want to wait several days to see his regular physician.
“This is more than convenient,” he said.
This article was produced by KFF Health News , formerly known as Kaiser Health News, a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF — an independent source of health policy research, polling and journalism.
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IRS has taken a negative view of micro-captive insurance, ensnaring small business owners.
Native American tribes and small businesses alike are counting on Congress to step in.
In September of this year, the Senate Finance Committee held a hearing to consider Marjorie Rollinson's nomination for the position of IRS chief counsel.
During this hearing, several committee members repeatedly emphasized their concerns about the enforcement practices and tactics of the IRS and how the agency enforces our nation’s tax laws.
I was very happy to see this, as IRS enforcement is an issue near and dear to my heart.
I was especially pleased that Senate Finance Committee Ranking Member Mike Crapo submitted a question to Rollinson addressing IRS enforcement issues in detail, specifically regarding the agency’s treatment of micro-captive insurance companies.
Micro-captive insurance, sometimes known as an 831(b) captive or small captive, is a form of self-insurance that allows companies to set aside up to $2.65 million annually to protect themselves from future risks.
The types of policies available through a micro-captive are nearly unlimited and often include coverage for risks not insurable through commercial markets. They are a very useful and effective tool for small businesses and offer greater flexibility and control than traditional policies.
I believe Congress showed great foresight in 1986 when it created section 831(b) of the tax code, and again when it was expanded and improved in 2015. For decades, this section of the tax code has been a lifeline for small business owners across the country.
Unfortunately, the IRS has taken a negative view of micro-captive insurance, ensnaring thousands of hard-working small business owners in an audit dragnet over the last several years. Many of these business owners are in legal limbo as the IRS investigates them for years and refuses to bring the case to Tax Court.
As a member of the Modoc Nation’s regulatory structure, located in northeast Oklahoma, I’m proud to say that our tribal chief, Chief Robert Burkybile III, publicly spoke out about this issue in March of this year. The Modoc Nation is a sovereign, federally recognized Native American tribe and enjoys the right to domicile business operations within its territory. The tribe houses a number of insurance companies, including micro-captives. The housing and oversight of these insurance companies and micro-captives provide vital revenue for tribal members.
As Chief Burkybile noted in March, the fees these companies pay are tremendously helpful to the tribe. They allow us to offer expanded social services to members, such as child care assistance, scholarships for higher education, quality housing and more.
In the months since he spoke out about this issue, the IRS has not reconsidered any part of its overreaching campaign against micro-captives. In fact, just a few months later the agency ramped up its efforts and proposed crushing new regulations that could force a majority of the industry to shut down.
This is completely inappropriate for the agency to do unilaterally. Congress created the framework for micro-captive insurance companies almost 40 years ago and has repeatedly reiterated its support in the decades since.
In contrast, it seems the agency presumes that if a small business owner owns or uses a micro-captive insurance company they are guilty of tax avoidance or forming a tax shelter. This presumption appears to exist before an investigation has even begun. The presumption of innocence should rule, as this is a tool Congress clearly intended for small business owners to use.
I want to reiterate my thanks to Sen. Crapo for lending his voice to this issue. I also hope other members of Congress, especially our state’s representative on the House Ways and Means Committee, Rep. Kevin Hern, will speak out against this egregious behavior. Members of the Modoc Nation and small businesses across the country are counting on him specifically, and Congress as an extension, to protect small businesses and the sovereignty of the tribe.
Mark Weitz is an attorney and founder at Weitz Morgan PLLC and currently serves as insurance commissioner for the Modoc Nation in northeast Oklahoma.