If you’re a small business owner in California thinking about offering health insurance, you’ve probably asked: How much do I actually have to pay for my employees’ coverage? The answer is important both for compliance and for making your plan successful.
Let’s break down the minimum employer contribution, how it works with different types of coverage, and why paying just a little more can go a long way.
What’s the Minimum Contribution for Health Insurance?
In California, if you want to offer a small group health plan, state and federal rules require you to pay at least 50% of the premium for the lowest-cost Silver plan available to your group. This minimum only applies to medical insurance and is based on the cost to cover the employee, not their family members.
As an employer, you are not required to contribute anything toward the cost of coverage for spouses or dependents. You can choose to, but it’s completely optional. If a dependent chooses to enroll, the employee is usually responsible for paying that additional cost 100%.
Paying 50% of the lowest cost silver plan for the employee helps your business stay compliant. From there, you can decide whether to offer additional plan levels, or offering multiple insurance carrier choices, or cover more of the premium.
What About Dental and Vision Insurance?
Unlike medical, dental and vision insurance are typically optional for employers. Most small businesses offer these plans on a voluntary basis, meaning employees can sign up and pay the full premium themselves and the employer does not pay towards the cost of dental and vision. If you want to contribute toward dental or vision, you can, but there’s no required minimum.
What If an Employee Chooses a More Expensive Plan?
If you offer multiple medical plans, say a Silver, Gold and Platinum plan. Your employee might decide to “buy up” to the better coverage. In that case, you’re still only responsible for paying 50% of the lowest-cost Silver plan. The employee would pay the difference between that and the higher plan they selected.
This gives your team more flexibility without locking you into higher costs.
Why Paying More Than the Minimum Can Help
Meeting the minimum keeps you compliant. But offering a little more than the minimum can really help your business and your employees.
- It makes coverage more affordable for your team
- It can boost participation rates, which is important to keep your group plan active
- It helps with employee satisfaction and retention
- It can reduce your employee’s taxable income if you set it up with a Section 125 plan
You don’t have to break the bank. Many small businesses start by covering 75% or offering a flat dollar amount. Even a small boost over the minimum shows your team that you value their health and well-being.
Keep It Simple and Get Support
Offering group health insurance doesn’t have to be confusing. You just need to meet a few basic requirements and choose a plan that works for your team. A licensed health insurance agent can walk you through the options, run the numbers, and help you stay compliant with employer contribution rules.
Want Help Setting Up a Group Plan That Works?
If you’re exploring health insurance for your small business, I’m here to help. I’ll make sure you understand the rules, compare plans, and find a setup that works for your team and your budget. Reach out anytime.
