Small Business Health Insurance Delaware
This document was created to guide small business, freelancers, or independent professionals in providing their best and most cost-effective employee benefits. It is possible to stay competitive without sacrificing the overall benefits package and compensation you offer.
Small Business Health Insurance Delaware Health Benefits
Delaware’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 adopt a conventional group health insurance program.
According to statistics from the Kaiser Family Foundation in 2022, the cost for group insurance sponsored by an employer that covered a worker’s family was on average $18,339.
Delaware employees contribute an average of $6,502, which is a bit more than $300 over the national average.
Delaware companies have other choices that can reduce costs. They include:
- Health Savings Accounts (HSAs).
- Health reimbursement arrangements (HRAs).
- Direct primary care memberships
- Health sharing programs
Your small business’s best strategy depends on a number of factors, such as the size and budget of your company, along with your employees and their dependents.
Read on the go, download our Complete Guide To Small Business Healthcare Plans.
Delaware Small Businesses and Their Geographic Considerations
Delaware offers a diverse healthcare environment, including both urban centers like Fayetteville or Little Rock as well rural communities like Waldron.
Delaware’ business owners must therefore consider how to distribute their employees throughout the entire state. Executives in Jonesboro who are responsible for company headquarters should not choose an HMO plan that limits workers and their family to in-network providers when many employees in Cash live and work far away from this network.
Small Business Health Insurance Delaware
Most Delaware employers choose traditional group health insurance.
It’s an expensive option.
The following is how the system works:
Third-party health insurers, which are usually for-profit corporations, provide benefits to employees as well as their dependents if they so desire.
According to the Affordable Care act, employers with at least 50 workers must provide ACA health insurance coverage for their full-time employees.
Under the Affordable Care Act, the insurance plan must have the following ten coverages. These include:
- Ambulatory care (outpatient health services that are provided without the need to enter a hospital)
- Emergency services
- Hospitalization, such as surgery or overnight stays
- Maternity, newborn and pregnancy care
- The services include mental health, substance abuse disorder treatment and counseling (psychotherapy).
- Prescription drugs
- Rehabilitative or habilitative services or devices are devices or services that assist those who have disabilities or mental conditions to gain or regain their mental and/or physical skills.
- Laboratory services
- Health and wellness services for chronic and preventive diseases
- The coverage of pediatric services includes oral and optical care. Adults are excluded from this benefit.
In addition to birth control, ACA states that the health plan must also cover breastfeeding and coverage of contraception.
When a worker enrolls within his initial enrollment period or during any special enrollment periods triggered by qualifying events in their lives, as well as during the general open registration period starting November 1 of every year, an insurance company will not be able to deny or raise premiums because of past medical conditions.
Small Businesses in Delaware Can Choose to Offer Health Insurance
The Affordable Care Act does not require employers to provide health insurance for employees with less than fifty.
Delaware’s state law also does not require health insurance. There is no requirement to provide insurance for employees who have less than 50.
You will not be penalized.
Employers of all sizes should consider offering health benefits. That includes very small firms, because they may find it difficult to hire and keep quality employees if there is no competitive benefit.
Delaware has a low unemployment rate and fierce competition between employers to find talent.
Delaware employers are able to save considerable money by offering medical cost-sharing or health sharing plans (more details below) that pay for some or all costs.
Small Business Health Insurance Delaware 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.) Both employers and employees are eligible for tax-free treatment.
Contributions by employers are tax-deductible. Your employees won’t pay tax on the QSEHRA benefits, unlike those paid in cash.
This is why offering employees a QSEHRA can be better than offering them a health insurance subsidy that they could use for health insurance purchases or to cover other costs.
4.) QSEHRAs support employee choice
Many traditional group insurance plans limit the options available to employees who are in such a wide variety of situations.
Many of these are expensive and inappropriate for workers because they were chosen by company managers and HR, rather than by them.
QSEHRAs give workers, their families, and employers a greater range of health plans to choose from.
Delaware taxed employer health coverage
As an employer, you can deduct all the health insurance premiums that you pay. This is true under federal law and Delaware’s state laws. These premiums are not taxable for the employees.
The overall cost of health sharing plans is lower. Employees can deduct the monthly costs. Employer assistance to pay health-sharing costs is taxable for the employee.
Employer health insurance in Delaware: The disadvantages
Both employers and workers have important advantages to traditional employer group health coverage.
- Cost. As we mention above, the sheer monthly cost of providing health insurance can be crippling: Especially for labor-intensive industries where labor costs are high in relation to revenue.
Some of the reasons why traditional health care insurance is so expensive are due to overkill. Washington and Little Rock regulators have been able to load up policies with mandated coverages, and requirements. This makes little sense for most employees.
For instance, many employees don’t require or want maternity and drug/alcohol addiction coverage.
The result is that they are much less effective and economical than needed.
- Inflexibility. Many group health insurance programs are a “one size fits all” approach that does not always meet the budgets and needs of employees. Group health insurance programs sponsored by the employer tend to be one-size fits all and may not adequately address specific employee needs or budgets.
Some workers may find it more cost-effective to purchase their own individual health plan, taking advantage of the Affordable Care Act subsidy.
These workers may benefit from a cheaper health sharing plan. Affordable and innovative alternatives to insurance may be the best solution, particularly for people in good physical health who do not have pre-existing health conditions.
More information on health share plans is discussed below.
- Administrative burden. Managing full-fledged benefits for health involves considerable administrative costs. Managing documentation and compliance is part of this. Also, auditors will audit plans to verify that no non-qualified employees have been enrolled in the plan. They are vital to the smooth running of a company’s insurance plan.
The plans can be very burdensome for employers with a small headcount who cannot justify hiring a staff member to handle the HR plan full-time.
Business owners could also consider strategies such as the Health Reimbursement Arrangements, or even health care stipends.
Alternative approaches can encourage employees to purchase their own coverage through the Affordable Care act. It may be possible to get subsidies if workers do this. This also removes the employer from the entire process, which reduces overheads and administrative costs.
Health Sharing Plans for Delaware Small Business Health Insurance
Delaware small businesses should consider health sharing programs as an alternative to costly insurance.
Delaware-based businesses use medical cost share plans more and more as an economical alternative to the traditional group health plan. When switching from traditional health insurance plans, businesses can typically save nearly 50% on premiums.
That means Delaware small businesses could potentially save more than $10,000 per year per employee for family coverage, and more than $3,500 per employee per year for single coverage.
These programs present a cutting-edge method for funding healthcare, enabling companies to give employees access to high-quality healthcare while controlling expenses. Health sharing programs work under the premise of sharing resources among a group of people or organizations.
As an alternative to traditional health insurance that involves payment of premiums, the participants in a Health Sharing Program make a set amount of cash per year.
Health Sharing Plans vs. Health Insurance
The health sharing plan is not the same as health insurance.
Instead, they are groups of individuals who have agreed to assist in paying for the medical bills of others. As opposed to for-profit health insurers, health sharing ministry is a non-profit organization.
Mandatory Coverage
The federal and state health insurance laws do not require coverage of many items that people may not want or need. The health sharing organization is not covered by the ten minimum essential coverage requirements.
It is not necessary for medical cost-sharing to cover addiction treatment costs for individuals who have never used drugs. Also, they do not need to cover any injuries caused by a member’s drunk driving.
Pre-existing Conditions
It is possible that health sharing plans impose waiting period before they share costs for treating pre-existing health conditions.
Some insurance companies also require waiting periods for surgery, except in the case of accidents or injuries which could not be anticipated prior to a member enrolling.
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 health plan that is not subsidized under the Affordable Care Act (ACA) or through the Delaware Health Insurance Marketplace.
Please note that health sharing plans do not qualify for subsidies as part of the Affordable Care act. However, the savings are so significant that switching to a health sharing plan is still beneficial for many, regardless of whether they qualify for an Affordable Care Act subsidy.
Delaware employers often find that switching to health-sharing makes more sense because small groups are not eligible for a tax credit under the ACA.
Health Sharing and Network Restriction – Small Business Health Insurance Delaware
Health sharing plans can offer greater choice in healthcare providers compared to managed care plans. HMOs are the most used group insurance plans offered by employers.
Health sharing organizations in Delaware don’t restrict their patients to providers in the network in most cases. Health sharing plan participants can choose any doctor they want. Choosing the doctor of your choice is a right that people should have.
Is Health Sharing Right for Your Business?
Every company is different. It’s important to carefully analyze the options before choosing a plan.
Business owners in Delaware can easily get an analysis of their case and recommendations that are specific to the organization they run and its employees.
We’ll get started by clicking here, to schedule an appointment with our Delaware-licensed Personal Benefits Managers.
Prepare a employee census to help.
The switch to health care insurance is usually a way for employers to save hundreds of thousands of dollars on average per employee. It may not make sense to share health insurance with workers who already have a pre-existing condition.
You can always consult with us and get an analysis for free.
Delaware Small Business Health Insurance Reimbursement Program
Employees can receive a tax-free reimbursement of healthcare costs through Health Reimbursement Arrangements.
Delaware small businesses often simply do not offer group health coverage. Instead they create an HRA. The HRA is used to pay for the workers’ health insurance using pre-tax dollars.
It allows employees to benefit from available subsidies, further lowering the cost of the business and the employee.
Workers can use their HRA benefits to pay other expenses such as co-pays for prescriptions, deductibles, or durable medical equipment. HRA is tax-free.
Your employees can choose their own health care plans with an HRA, instead of having to sign up for a formal health plan.
Click here to learn more about HRAs for small businesses.
QSEHRA
QSEHRA, or the Qualified small employer health reimbursement arrangement (pronounced “Cue Sarah”) is a type of HRA that can be used by small businesses.
The benefit is for employers with less than 50 employees full-time or equivalent and those who do not offer any traditional group health plan.
Business owners can set the maximum QSEHRA amount they wish to contribute, as long as it is within a certain limit. Delaware employers are allowed to make contributions up until 2023 of up $5,850 (up $487.50 monthly) for individuals and up $12,800 (up $983.33 monthly) for families.
They can use the money they receive to purchase individual or family health insurance, either through an Personal benefits Manager site on the internet health insurance exchange. They can still qualify for the subsidy if they purchase their own insurance through an online health insurance exchange or a Personal Benefits Manager in the individual and family market.
Employers can reimburse their employees either for the premiums alone or for both premiums and additional medical expenses.
QSEHRAs and Special Enrollment Periods
You will have to offer your workers a Special Registration Period if you are replacing your insurance plan with HRA. This window allows employees to choose their own ACA insurance plan, with guaranteed approval rights.
The QSEHRA will ensure your employees’ coverage is not interrupted when you replace the group health plan that was previously in place with an alternative QSEHRA.
The Advantages to HRAs
Health Reimbursement Arrangements have many benefits.
You can deduct the money that you spend for HRA benefits, and your employees will not pay any tax on it.
HRA is your money, and you retain it until the funds are actually distributed to employees. This money remains in your account as an operating capital. No third parties are required.
The HRA benefit can be designed by employers in a way that suits their needs, and includes what costs you’re willing to cover.
Employees don’t lose their health insurance coverage when they quit the company or switch to contractor status. With QSEHRA’s approach, each worker is the owner of his/her insurance and can control it. Employer not.
The Disadvantages to HRAs
Workers may not be interested in the responsibility to select and compare their health insurance. Workers may require extra assistance in navigating this transition.
You can get help from your HSA for America Benefits Manager if this happens. This ensures that no worker gets left behind.
You also can have your employees click this link or call 800-913-0172 to schedule an appointment for individual service.
To learn about the alternatives to employer sponsored health insurance in Delaware, click here.
The Direct Primary Care Benefit
Direct Primary Care plans, or DPCs for short, are an alternative model of healthcare that has been gaining in popularity both in Delaware and throughout the United States.
This is a model based on membership: Your employees can receive as many consultations as they require, whether in-person or through telehealth, for an affordable flat monthly fee.
With monthly membership costs as low as $80, DPC provides an attractive and viable approach for individuals to prioritize their health without the burden of copays or coinsurance.
DPC offers members access to all routine, primary, preventive and chronic care services.
The following are some examples of direct primary healthcare services:
Some of the most common medical services offered by doctors who practice Direct Primary care include:
- Preventive care. DPC physicians emphasize prevention medicine, providing services like routine checks-ups and immunizations as well as screenings and tests 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, hypertension, and asthma. The doctors provide continuous care and monitoring as well as adjustments to the treatment plan when necessary.
- Comprehensive physical exams. DPC physicians offer comprehensive physical exams to evaluate overall health, identify risks and give personalized recommendations.
- Urgent care. DPC physicians are available to provide same-day and next-day emergency care.
- Diagnostic services and Laboratory Services DPCs may perform or arrange a range of lab tests including X-rays/ultrasounds/electrocardiograms/blood work.
- Medication Management DPC Doctors can prescribe medications. Monitor their effectiveness. And make any adjustments needed. Additionally, DPC doctors provide medication education and counselling.
- Mental health services DPC practices offer mental health as part of their total care. DPCs may also refer their patients to specialists and provide them with counseling.
- Minor procedures. DPCs are equipped to carry out minor surgeries in their own offices.
- Care coordination, referrals. DPC’s doctors coordinate and advocate for their patients, and work with specialist hospitals, clinics, and other healthcare professionals when necessary.
Patients can receive immediate attention to non-emergency issues by making appointments.
No insurance companies are involved so there’s nothing to worry. A monthly subscription will cover all costs. So, workers with limited funds can receive immediate medical attention. Never again will workers have to avoid seeing their doctors because they cannot afford a deductible, co-pay or other costs.
To get the coverage for services that DPC does not cover, patients may choose additional plans like high-deductible plans, accident insurance or health sharing plans. DPC’s membership already includes routine care, so patients can also choose more affordable coverage, like health sharing, than traditional health insurance.
Health Savings Accounts for Small Business Health Insurance Delaware
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.
HSAs let individuals set aside money before taxes to help pay future medical bills. HSAs allow both employers and their employees to contribute, up to the limit of an annual amount set by Congress each year.
HSAs enable individuals to pre-tax funds for future medical needs. HSAs can be funded by employees as well as employers. However, the annual contribution limit is set each year by Congress to match inflation.
Withdrawals to pay qualified healthcare costs are tax-free.
HSA Eligibility for Delaware Small Business Health Insurance
Employees must be enrolled in an HDHP to qualify for a HSA or employer contributions pre-tax.
The IRS has defined a high-deductible health plan for 2023 as one that includes a minimum deductible of $1,500 per individual and $3,000 per family.
The total annual out-of pocket expenses for an HDHP (including copayments and coinsurance), cannot exceed $7,500 per individual, or $15,000 per family. This limit does not apply to services provided outside of the network.
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 tax savings and healthcare can bring with the advantages of cost-savings of sharing health care.
To participate in the program, however, it is required that employees have some sort of income as a sole proprietor or owner-operator.
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.
And, of course, the HSA SECURE Plan may also be a great money-saving option for you and your partners as a small business owner.
HSA SECURE would require your employees to register on their behalf. After they enroll in and create an HSA you can pre-tax contribute to that account on behalf of your employees, as long as the amount Congress determines annually is not exceeded.
HSA Secure: Click Here to Learn More
Request a Group Quote for Your Company
How Are Delaware Small Business Health Insurance Benefits Taxed?
You now know about the different strategies that small businesses can use to supplement traditional health coverage. Below is a quick table that shows how taxed each one of them.
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
All Care Pyramid Levels Should Be Addressed
As shown in the below diagram, a good package of employee benefits should cover all of the levels of the Employee Healthcare Pyramid, from preventive health care to primary care for early detection and maintenance of health issues, up until catastrophic events.
We list the most common insurance solutions for each of the levels in the Care Pyramid on the left.
We list on the right a variety of alternatives, which are more cost-effective, to provide meaningful protection for the employees in each level of the Pyramid.
A plan design that is good will offer employees affordable solutions on each of these levels. The plan should ensure that none of the employees are forced to postpone or skip care simply because they don’t want to pay a higher premium, a copayment, or if coinsurance is required.
A Personal Benefits manager can assist you in creating a plan that is tailored to your employees and provides solutions at every level of the Care Pyramid. This plan will often cost a fraction as much as a group plan for the employer.
Small Business Health Insurance Delaware Tax Credit
Small Business Health Insurance Delaware Tax Credit was passed alongside the ACA and allows small business to claim a tax credit for up to 50 percent of employee health care costs.
The program was designed to help small businesses that have fewer than 25 employees or who hire people at lower salaries.
In general, the credit can be claimed by for-profit and non-profit businesses that:
- Have fewer than 25 employees and average salaries of around $53,000 or less (excluding the salaries of all owners). In general, owners are not included when figuring out the number of employees and average salaries for the business. Also, the number of employees is based on “full-time equivalents” (FTEs). That means two half-time employees would equal one full-time employee.
- Pay at least half of the cost of premiums for employees; and
- Offer Affordable Care Act-qualified coverage available on the state exchange, in Delaware’s case, on Delaware Health Insurance Marketplace (AHIM).
If an employer employs 25 people or has an average annual wage of $53,000, the tax credit will be eliminated.
How can I get credit for my purchase?
Tax-exempt small business must submit Form 990T for tax purposes, even if they are not required to do so.
You are exempt from taxation on contributions made to your employee’s health coverage.
I don’t owe taxes this year for my business. Can I still claim the tax credit?
Yes. This tax credit can be carried back and used to offset income tax liability incurred the previous year or carried forward to offset liability incurred over the next 20 years.
If you’re a tax-exempt business, the credit is refundable.
Consult your tax advisor for full information about the Small Business Health Care Tax Credit.
Combining Delaware Small Business Health Insurance Strategies
Combining programs to increase your insurance coverage can be smart.
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 occurrences is one way to achieve cost savings.
This strategy is more cost-effective for both your business and your employees.
Employees can be given more options and lower costs by allowing them to choose between a Health Sharing Plan or an Individual Health Insurance plan. They may also have the option of funding a Health Savings Account for HDHP plans that qualify for HSAs.
How to proceed?
Contact us to receive a complimentary, free business health plan assessment and recommendation.
Your HSA for America Personal Benefits Manager will review your family and work situation with you. They’ll also discuss your budget, needs and employees’ contribution ability.
Several of our PBMs are successful entrepreneurs and business owners. Many of our PBMs have owned successful businesses and are entrepreneurs themselves. They understand what you need as a business leader and how to attract and retain top talent.
Can I provide both Health Insurance and Health Sharing at the same?
If you offer both, employees can choose the one that suits them best.
Please note, if your group health insurance program is not well-attended by employees, it could result in you falling below the participation level required to continue offering a policy. HRAs are a great way to reimburse your staff for personal health insurance. The cost will be similar.
Request a Group Quote for Your Company
Small Business Health Insurance Delaware FAQ
The difference between Health Insurance for Small Business and health sharing.
The traditional health insurance plan is offered by the insurance company, whereas health sharing is when members contribute to a fund to pay for each other’s healthcare expenses.
What are the benefits of Health Savings Accounts for Delaware employees?
HSAs enable individuals to pre-tax save money for future medical bills. Employers and employees both can contribute. This provides tax advantages as well as potential savings in healthcare expenses.
Delaware allows employers to deduct contributions made by them towards HSAs when calculating state income taxes?
Yes. Delaware lets employers deduct the full amount of their contribution to an employee’s HSA as part of their compensation.
Offer Direct Primary Care Plans (DPCs) along with other Coverage Options for Small Businesses in Delaware.
Small business and employees can get comprehensive coverage by using DPC in conjunction with affordable options, like health-sharing plans.
How do you claim the Small Business Health Care Tax Credit ?
Businesses that earn a profit can claim a tax credit by completing IRS Forms 8941, while small, tax-exempt companies must complete Form 990T.
HSA for America cannot provide you with tax advice. Employers can consult their own tax advisors to get full details of the credit.
In Delaware, are maternity benefits included in health sharing plans?
Delaware health plans that offer health coverage and insurance often include maternity care benefits. These cover prenatal care and care during labor and delivery, as well as postnatal care. Some health sharing plans have limitations on the costs-sharing for children who are not born to married couples.
How do I know which health insurance plan and cost-sharing option is right for my Delaware small business?
Do not go at it alone, take a team with you! Contact one of our Personal Benefits Managers to help. They can provide a complimentary analysis and recommendations based on the specifics of your needs, including budget, employee count, and pre-existing conditions. The experts can design a plan to maximize the value of your employees, while controlling costs. This will help you stay competitive.
Do health-sharing plans have waiting periods for conditions that preexist?
Some health sharing plans do have waiting periods before they cover pre-existing medical conditions. For more details on specific plans, it’s best to consult the plan guidelines.
Are employers allowed to contribute to HSAs for their employees in Delaware?
The annual contribution limits set forth by Congress apply to employers who wish to contribute to HSAs for their employees.
Delaware allows employers to deduct contributions made by them towards HSAs when calculating state income taxes.
Yes. Delaware lets employers deduct the full amount of their contribution to an employee’s HSA as part of their compensation.
Offer Direct Primary Care Plans (DPCs) along with other Coverage Options for Small Businesses in Delaware.
Small business and employees can get comprehensive coverage by using DPC in conjunction with affordable options, like health-sharing plans.
Does a small business that does not have any Delaware taxes owe be able to claim the Small Business Health Care Tax Credit in Delaware?
Even if the business does not owe any taxes for a given year, it can still carry back the Small Business Health Care Tax Credit to offset the income tax liability of the previous year.
What is an HRA?
HRAs reimburse employees’ qualified medical expenses that are not covered under their health insurance plans. The employer determines which expenses are covered and how much money they will contribute.
QSEHRAs are only open to employers that have fewer than 50 employees. You can still get HRAs if you are an employer with more than 50% of employees.
You may also face an ACA penalty if you do not provide a plan with qualified coverage for employees. You should speak to your Personal Benefits Coordinator if your company is about to or plans on hiring its 50th full time worker, or its equivalent, in the next few months. Your plan could be affected.
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