Maryland Small Business Health Insurance Options

The Complete Maryland Small Business Health Insurance Guide (2024 Edition)

The HSA for America Guide to Small Business Health Plans in Maryland is here. This guide is aimed at companies in Maryland with 30 or less employees.

The purpose of this document is to assist small businesses, independent professionals, and freelancers in providing the most effective, cost-effective set of health benefits for their employees. You can still be competitive while offering benefits and a compensation package that will keep the top talent on your team.

Maryland Small Business Health Insurance Benefits

Maryland’s small business owners have a variety of options to choose from when providing benefits for their employees.

One of the most cost-effective, yet most commonly used, options is to use a standard group health insurance policy.

Prices differ by age. However, according to statistics from the Kaiser Family Foundation in 2021, an employer sponsored group health plan covering both a worker’s family and a worker was expected to cost $21,648, nearly $300 higher than average.

Maryland’s employees pay an average of $6,359 for their health insurance, which is almost $200 above the national average.

Fortunately, Maryland businesses also have a variety of other options at their disposal that may reduce their costs substantially. These include:

Health savings Accounts (HSAs)
HRAs are health reimbursement plans
Direct Primary Care (DPC), memberships
Programs for health sharing

The right small-business strategy will depend on many factors. These include the size of your organization, your budget, as well as your workers’ age, medical needs, and those of their dependents.

Read on the go, download our Complete Guide To Small Business Healthcare Plans.

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Maryland Small Business Health Insurance Geographic Location

Maryland offers a diverse healthcare ecosystem, including both the urbanized areas of Baltimore, Annapolis, or Columbia as well more rural locations like Taneytown.

Maryland businesses should consider carefully how to distribute their employees throughout the entire state. For executives at company headquarters in Baltimore, choosing an HMO plan that limits workers to in-network physicians is not a good idea when the majority of employees in Owings Mills live and are employed there.

Maryland Small Business Group Health Insurance

Maryland’s employers most commonly choose the traditional health group insurance.

It is also one of the most pricey.

The following is how the system works:

A third-party insurer, usually a corporation that makes money from insurance policies, is contracted by an employer to provide health benefits for its employees. If the employer so desires, they can also include their dependents.

All employers that have at least 50 employees are required to offer ACA-qualified insurance plans for employees who work over 30 hours per week. If they don’t, they face a fine.

It must provide the minimum essential coverages, or MECs as they are called in the Affordable Care Act. They are:

Patients can receive ambulatory services without needing to go into hospital.
Emergency services
Hospitalization can include overnight hospitalizations and surgery.
The care of newborns, pregnant women, and mothers (both before and afterwards)
Treatment for substance abuse disorders, mental illness and behavioral problems (including counseling and therapy)
Prescription drugs
The Rehabilitation and habilitative Services and Devices (Services or devices that help those with disabilities or injuries to regain mental or physical abilities)
Laboratory services
Chronic disease management and prevention services
Adult dental coverage and adult vision insurance are not considered essential health benefits.

As part of the ACA, health insurers must also cover contraception and breastfeeding.

The traditional option of health insurance, while expensive for companies, has the advantage that it is guaranteed to enroll.

If the worker applies during their initial enrollment, a special period that is triggered after a life-changing event or the annual open enrollment, which begins on November 1, the insurer cannot deny them coverage because of a medical history.

Small Businesses in Maryland Can Choose Not to Offer Health Insurance

The Affordable Care Act does not require employers to provide health insurance for employees with less than fifty.

Maryland’s state law also does not require health insurance. There is no requirement to offer insurance for businesses with fewer 50 employees.

There is no penalty.

It’s important for all employers to provide health benefits, even small ones. This is because it will be more difficult for them to attract and retain good employees without a health plan that offers a high level of competition.
Maryland in particular is an area where the rate of unemployment is relatively low, and there is fierce competition amongst employers for talented employees.

Maryland employers have the potential to save lots of money through a Medical Cost Sharing or Health Share Plan (more below). You can pay all or part of these costs and offer it as a benefit for their employees.

HRA Alternative

You can also offer your employees a QSEHRA (Qualified Small Employer Health Reimbursement Arrangement) that allows them to pay their individual health insurance tax free.

Employers can benefit from QSEHRAs in the following ways:

1.) Contribution limits are not applicable

QSEHRAs don’t require a set minimum annual contribution, unlike pension plans. You can set up your budget and adjust it each year based on your cash flow.
You can control your budget for health care benefits with a QSEHRA.
2.) Flexibility

Employees can be offered a different benefit based on whether they are married or have children. You can therefore discriminate against employees without dependents by offering a higher benefit to those with families.

3.) Employers and employees both enjoy tax-free status

As a result, your employer’s contributions can be deducted as an expense. No tax will be paid by your employees on QSEHRA, but unlike cash payments. This is provided that they have a plan of health insurance which includes 10 essential benefits specified under the Affordable Care Act.
It is for this reason that a QSEHRA can be a better option than simply providing a health care stipend to the employees. They could use it to purchase health insurance, or pay other costs.

4. QSEHRAs Promote Employee Choice

There are too many group health plans that limit employees to just one or a few options.

The HR department and the company’s management select these items, which are overpriced or unsuitable to workers.

A QSEHRA offers workers and families a wide range of options and gives them the power to select a health plan which is right for them.

Maryland’s Taxation of Employer-Provided Healthcare Coverage

According to federal law as well as Maryland state legislation, health insurance premiums are fully deductible as a company expense. Additionally, the premiums paid by employers are tax-free for employees.

They have a lower cost overall. They are tax-deductible by the employee. But employer contributions to health cost sharing are also taxable.

Maryland Small Business Health Insurance Has Its Disadvantages

There are some disadvantages of traditional health care for employees and employers.

Cost
We have already mentioned that the cost to provide health insurance is high. This can be especially true for industries with high labor costs.

Many workers are overburdened by the requirements of health insurance, which they find unreasonably burdensome. Washington and Annapolis regulators impose a number of mandatory policies and provisions.

As an example, the traditional insurance industry requires insurers to include mental health benefits, drug and liquor addictions, as well as maternity coverage that most workers are not interested in.

It makes them less efficient and more expensive than they should be.

Inflexibility
The majority of group health plans offer an all-encompassing strategy that does not necessarily meet specific needs or budgets. The nature of employer-sponsored health insurance group plans is to only offer a few solutions, which may not suit the needs and budgets of specific employees.

It may make sense for workers to buy their own plans on the market. They could take advantage of an Affordable Care Act subsidy.

It may also make sense to opt for a health-sharing plan that is less costly. Innovative and affordable health insurance alternatives can provide a solution, especially to workers in excellent health with no existing conditions.

The following sections will discuss in detail health sharing plans.

Administrative burden

The administrative burden of managing an entire health insurance plan is substantial. This involves managing paperwork and compliance.

Auditing plans in order to prevent employees from enrolling people who aren’t qualified, as well as responding to staff questions. The health insurance program within an organization must run efficiently and smoothly.

However, they are an enormous burden on very small businesses who lack the manpower to hire a HR department to administer the plan.

Business owners can also use strategies like Health Reimbursement Arrangements or health care stipends.

The Affordable Care Act offers alternative ways to encourage people to get their own health insurance. The workers may benefit from the available subsidies. The employer is also removed from the whole process.

Maryland Health Sharing Plans

Small businesses in Maryland can benefit from health sharing plans as an affordable and viable alternative to expensive insurance.

Medical cost-sharing plans are becoming a popular alternative to traditional health plans for Maryland businesses. These plans offer a more affordable option than the old group insurance policies. Qualifying companies can save up to 50% by switching to health-sharing plans from traditional group insurance.

Maryland small businesses can save upwards of $10,000 per employee annually on coverage for a family, or $3,500 if they only cover one employee.

These programs offer a modern way of funding healthcare. Companies can provide their employees with access to high quality healthcare and still control costs. Shared resources are the basis of health-sharing programs.

The participants of health sharing programs make a certain amount of money each year, instead of the usual insurance premiums that are paid to insurance providers.

Health Sharing Plans vs. Health Insurance

The health sharing plan is not the same as a health insurance policy.

Health sharing groups are associations made up of people with similar interests who share medical costs. Health sharing organizations are not-for-profit, unlike health insurance companies.

Mandatory Coverages

Health insurance plans do not have such requirements. Federal and state law require that traditional health insurance policies include many coverages for which many people are unwilling or unable to pay. Health sharing organizations are not subject to the Ten Minimum Coverage Requirements.

For example, medical cost-sharing plans do not have to pay for addiction treatment in the case of people who don’t use drugs. They don’t have to pay for injuries caused by drunken driving.

Prior Existing Conditions

Health sharing Plans may have waiting periods for sharing costs associated with pre-existing health conditions.

Of course, they also have waiting periods for surgery. This is true for all but accidents or injuries which could not be anticipated prior to the enrollment of a member.
This waiting period helps health sharing organizations offer a wonderful set of health benefits at a fraction of what it would cost to purchase a group insurance policy that is not subsidized under the ACA or through Maryland Health Connection.

Please note that health sharing plans do not qualify for subsidy under the Affordable Health Care Act. However, the savings are so significant that even those who do not qualify for a government subsidy can benefit by switching to a health sharing plan.

Maryland employers may find that switching to health sharing is even more attractive because small groups are not eligible for a tax credit under ACA.

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Maryland Health Sharing and Network Restrictions

Health sharing plans can offer greater flexibility when selecting healthcare providers. They are more popular than managed care options such as HMOs.

Maryland’s health sharing organizations do not typically restrict their members to using providers who are part of an in-network provider network. Instead, the health sharing plans allow members to pick their own doctors or providers. The freedom of choice for people to choose their doctors.

Does Your Business Need to Offer Health Sharing?

Each business is unique. It takes careful consideration to choose the right plan for your business, regardless of whether you’re using a health sharing plan or traditional group health coverage.
It’s simple for Maryland business owners to receive a complete case analysis with recommendations specific to their organization and employees.

Click here and make an appointment to meet with one of the experienced personal benefits managers licensed in Maryland.

You can help yourself by preparing a staff census.

Most of the time, switching from health insurance to health sharing will result in thousands of savings per employee. Health sharing is not recommended if your employees have pre-existing medical conditions.

Consultation and analysis are always provided free of charge.

The Direct Primary Health Care Advantage

Direct Primary Care plans, or DPCs for short, are a healthcare alternative that has been gaining popularity all over the nation and in Maryland.

The model is membership-based. For an affordable monthly membership fee (similar to that of a gym), your employees get as many visits they need in person, or via telehealth.

DPC memberships start as low as $80.00 per month, making it a very affordable and attractive option to improve your health.

DPC offers members access to all routine, primary, preventive care and chronic services.

The following are some examples of direct primary healthcare services:

Preventive care. DPC physicians emphasize prevention medicine, providing services like routine checks-ups and immunizations as well as screening for different conditions.
DPC physicians treat minor injuries and acute illness such as colds and flu.
Management of chronic diseases DPC doctors can help manage chronic diseases like diabetes, asthma, hypertension and arthritis. The doctors provide continuous care and monitoring as well as adjustments to the treatment plan when necessary.
Comprehensive physical exams. DPC offers comprehensive physical exams that allow doctors to determine your health status, assess potential risks, as well as provide you with personalized health recommendations.
Urgent care. DPC physicians are available to provide same-day and next-day emergency care.
Patients can receive immediate attention to non-emergency issues by making appointments.
Diagnostic and laboratory services. DPC physicians may coordinate or offer a wide range of diagnostic and laboratory services, including blood tests, urine analyses, imaging studies, (X-rays and ultrasounds), as well as electrocardiograms.
Management of medication. DPC doctors are able to prescribe medication, track their effectiveness and adjust as necessary. The doctors also offer education on the proper use of medications.
Mental health service. DPC practices often include mental healthcare services in their overall care. DPC practitioners may refer to mental health professionals for counseling or therapy.
Minor procedures. DPC physicians are sometimes trained to do minor procedures right in the office. These include suturing cuts, removing skin lesions or moles, injecting joints and more.
Referrals, coordination and care. DPC doctors are patient advocates who coordinate care and refer patients to specialists, hospitals, or other providers of healthcare when needed.

There are also no co-payments, coinsurances or deductibles because there’s not an insurance company. Monthly subscriptions cover everything. It allows workers who are strapped for cash to receive the medical care they need immediately. Patients no longer need to postpone their doctor’s appointments because of a high deductible or copay.

Patients can select supplemental plans to cover additional services, such as accident insurance, high-deductible health plans or health sharing plans. DPC members can choose to cover routine health care at a lower cost by opting for health sharing plans instead of traditional insurance.

A Powerful Tool: The Health Savings Account (HSAs)

The HSA (Health Savings accounts) is a powerful tool that can assist workers in managing their health care costs and also help to keep the premiums of workplace health insurance lower.

Marylanders and business owners need any tax relief they can find. It’s good to know that employer contributions made by employees into their Health Savings Accounts are fully deductible from Maryland corporate income taxes as a compensation cost.

HSAs are a way for individuals to put money away before tax in anticipation of future medical costs. HSAs can be funded by both employers and employees, but there is a cap on the amount that each party may contribute. The limit changes annually to match inflation.

The money in an HSA grows tax deferred, and any withdrawals made to cover qualified medical expenses are tax-free.

HSA Eligibility

For employees to be eligible to contribute to their HSAs or receive employer-paid pre-tax contributions, they must have a qualified high deductible health care plan.

According to the IRS, a high-deductible plan is one with a deductible at least of $1500 per person, or $3000 for the family for 2023.

Total annual HDHP out-of pocket costs (including copayments, deductibles and coinsurances) cannot be higher than $7500 for individuals or $15,000 per family. The limit is not applicable to outside-the-network care. ).

Can I combine HSAs & health sharing?

HSA America offers only the HSA-SECURE plan.

HSA SECURE Plan provides a way for you to enjoy the advantages that come from a healthcare savings account and the advantages of cost-savings through healthsharing.

To enroll in the program, however, it is necessary that your employee has some type of small business, self-employed, or owner income.

HSA SECURE will not be available for straight W-2 workers. HSA-SECURE may work for you if the employee has a side business, is self employed, does freelance or other part time work and is in excellent health.

HSA SECURE Plans are also an excellent way for small business owners to save on expenses.

HSA SECURE does not apply to W-2 employees. HSA SECURE is a good option for employees or spouses who have a small business or freelance job, as well as side jobs, but are otherwise healthy and do not need to be treated regularly.

The HSA SECURE plan is also a good option to save money for both you and your business partners.

You would need to have your employees enroll themselves in HSA SECURE. Once they have enrolled in an HSA and set it up, you may make contributions pre-tax on their behalf.

HSA Secure: Click here to learn more about HSA SECURE.

How is Maryland Small Business Health Insurance Taxed?

This table explains the taxation of each alternative strategy available to small companies in addition traditional health insurance.

Plan Type	Employer	Workers
Traditional health insurance premiums	Tax deductible. May qualify for a tax credit (see below)	Non-taxable
HSA contributions	Tax deductible	Pre-tax, up to certain limits. No income limitations.
Health sharing costs	Tax deductible as a compensation expense	Taxable as ordinary W-2 income
Health reimbursement arrangements	Tax deductible	Benefits are non-taxable to the employee
HSA withdrawals	N/A	Withdrawals for qualified medical expenses are tax-free. Otherwise taxable as ordinary income. A 20% penalty for non-qualified withdrawals applies up until age 65.
Direct primary care costs	Tax deductible as a compensation expense	Taxable to the employee

Maryland Small Business Health Insurance Care Pyramid

As shown below, a good employee health benefits package will address all levels of Employee Healthcare Pyramid, from routine preventive health care to primary care access and early detection of health issues, up to catastrophic incidents.

Maryland Small Business Health Insurance Care Pyramid

On the left, we list common traditional insurance-based solutions that address each level of the Care Pyramid.

On the right, we list a number of alternative, more affordable approaches to providing meaningful protection for employees at each respective level of the Pyramid.

Employees can find affordable solutions for each level of the plan with a well-designed plan. It is important that there are no employees who have to go without or delay treatment because they cannot afford the premiums, copays, or coinsurance.

The Personal Benefits Coordinator can create for you a unique plan which provides solutions to each of the levels of the Care Pyramid. Often, this is at a fractional price of what a typical group plan would cost the employer.

Maryland Small Business Health Insurance Tax Credit

Small Business Health Care Tax Credit, passed with ACA, permits some small business to claim a tax credit up to 50 percent of the employee health insurance cost.

This program is designed for small business owners who have 25 or less employees and tend to hire workers at lower wages.

Businesses that are for-profit or non-profit can claim the tax credit.

* Employ fewer than 25 people and pay an average salary of $53,000 (excluding all owner salaries). Owners are generally not considered when calculating the average salary and number of employees for a business. The number of employees are also based on the “full-time equals”. Two half-time workers would be equal to one full-time worker.

*Paying at least 50% of employee premiums;

You can offer coverage that meets the requirements of Affordable Care Act on your state’s exchange. In Maryland, this is Maryland Health Connection.

Once an employer has 25, employees, or if the average salary is $53,000 or more

What is the process for claiming credit?

This tax credit can be claimed on your income tax returns with IRS Form 8941 attached (tax-exempt businesses are required to submit a Form990-T to make a claim even though they do not have to).

You Have to Do Something Now

It is best to conduct an employee survey and call us and receive complimentary business health plans and recommendations.

The HSA for America Benefits Manager you are connected to will discuss with you your workforce and family, budget needs, employee contributions, as well as any existing conditions that need to be taken into consideration when creating a new program.

Many of the PBMs we work with are also successful businessmen and entrepreneurs. The PBMs understand the needs of business owners and know what is required to retain and recruit top talent.

Do I have to offer health insurance AND health sharing together?

It is possible to offer the two options together, giving employees the choice of which option best meets their needs.

You may fall short of the required minimum rate if you have too few employees participating in a health plan. HRAs can be used to reimburse employees for their individual health coverage, which is close to that cost.

Combining Maryland Small Business Health Insurance Strategies

It is possible to maximize the coverage of your health insurance by combining various programs.

Many employers find that they can reduce their costs by offering a range of packages to employees, while still providing them with complete healthcare coverage.

Combining a Direct Primary Care Plan (DPC), which covers normal primary care, with a low cost health sharing program that includes catastrophic events is one way to achieve a cost effective solution.

This alternative to traditional group health insurance can make it more affordable, either for the company or for employees.

If you give employees the option to sign up for an HDHP that qualifies for an HSA, or purchase an individual plan of health insurance, they can have more freedom and potentially lower costs.

What to do Now

The best way to proceed is by putting together a business health plan and contacting us.

Please contact us so that we can provide you with a complementary, complimentary analysis of your business’ health plan.

An experienced HSA for America persona benefits manager can be connected to you. He or she will look over with you the work force, families and your budget. Also, they’ll discuss any prior conditions and your employee’s ability to pay.

Many of PBMs who work for us have also been entrepreneurs themselves. Since they have been business owners, our PBMs know how important it is to hire and retain talent that will help your company remain competitive.

What if I offer both health insurance and health sharing?

You can provide both plans side-by-side, so that employees have the option to select which one best suits their requirements.

If too many of your employees choose to opt out, then you may not be able to keep a group insurance plan. You can use an HRA as a reimbursement for the employee’s individual health insurance. This will cost close to the same.

Maryland Small Business Health Insurance: Common Questions

What is the Difference Between Health Insurance and Healthsharing for Small Businesses?

A health sharing plan involves insurance members pooling their funds together to pay each other’s medical bills.

Are employers allowed to contribute towards their employee’s HSAs?

You can make contributions into your employees’ HSAs. However, there are limits that Congress sets annually.

Do small Maryland businesses make any sense by offering Direct Primary Care plans alongside other insurance options?

Health sharing plans and DPC can be combined to provide small business owners and employees with comprehensive healthcare coverage at a low cost.

If a Maryland business does not owe any taxes, can it still claim the Small Business Health Care Tax Credit?

The Small Business Health Care Tax Credit may be used to reduce income taxes owed in the prior year. It can also be carried forward up to 20-years.

Does Maryland have a limit on the size of small business eligible to receive these programs?

Only employers with fewer than fifty employees are eligible for the Qualified Small Employee Health Reimbursement Arrangement. If you employ more than fifty employees or your business grows beyond 50, you can choose from other HRAs.
You’ll also be required by the ACA to offer a health plan that is qualified for your workers, otherwise you will have to pay a fine. Speak to your Personal Benefits manager if you plan on hiring your 50th employee or the equivalent soon. This could have an impact on your plans.

What is the best combination of cost-sharing and health insurance for my small Maryland business?

Get some assistance with this. Speak to a Personal Benefits manager. They can provide a complimentary analysis and recommendations based on the specific needs of your company, including budget and employee count, as well as any existing conditions. The Personal Benefits Manager can design a plan to maximize value while controlling cost and keeping you competitive.

Can you tell me about the waiting period for health plans that cover pre-existing conditions?

It is possible that some plans require a certain waiting period before beginning coverage for conditions already present. If you want more information about a particular plan, review the plan’s guidelines or talk to a Personal benefits manager.

Health Savings Accounts can be used to help Marylanders manage the medical costs of their employees.

HSAs let individuals set money aside for future medical expenses before tax. Contributions from both employers and employees may provide tax savings and help reduce healthcare costs.

Maryland: can contributions from employers to HSAs deductible?

Yes. Maryland allows employers to deduct their contributions for employee HSAs from state income taxes as compensation expenses.

How can I get the Small Business Health Care Tax Credit (SBHCTC)?

Tax credit claims can be made on Form 8941 of the IRS for businesses that make a profit, while small tax-exempt businesses are required to file Form 990-T.

HSA for America is not a tax advisor. For more information, employers should contact their tax advisor.

How does an HRA work?

HRAs are employer-funded accounts that reimburse employees for medical costs not covered by insurance. Employers decide what medical expenses qualify and then contribute money accordingly.

HRAs can be combined with other options for coverage, such as health sharing plans and individual health insurance policies.

HRAs are compatible with other insurance options. HRAs can be used to reimburse employee premiums on individual policies. HRA funds cannot be used directly to reimburse employees for the costs of health sharing plans.

Do health-sharing plans cover maternity benefits in Maryland?

Maryland health plans and insurance companies offer maternity benefits that cover prenatal, postnatal, and labor care. Some healthsharing plans restrict the cost-sharing benefit for children born outside marriage.

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