Small Business Health Insurance Options in Iowa
HSA for America Complete Guide to small business health insurance in Iowa. This guide is for Iowa small businesses with 30 or fewer employees.
This document was created to guide small business owners and professionals in creating the best possible employee health benefit package. To remain competitive you must offer benefits that are attractive to the talent you want and the package of compensation necessary to retain them.
Iowa Small Business Health Insurance Benefits Options
Iowa small businesses have many choices when it concerns providing employee health coverage.
One of the most cost-effective, yet most commonly used, options is to adopt a conventional group health insurance program.
According to information from the Kaiser Family Foundation and based on the age of the insured, in 2021, the cost for employer-sponsored health insurance that covers a worker’s family was an average $20,567.
Iowa employees pay an average amount of more than $5442 toward health insurance.
Fortunately, Iowa businesses also have a variety of other options at their disposal that may reduce their costs substantially. These include:
- health savings accounts (HSAs)
- health reimbursement arrangements (HRAs)
- direct primary care (DPC) memberships
- health sharing programs
The best strategy for your small businesses depends on multiple variables, including size of your business, your available budget, and the age and medical requirements of your workforce and their dependents.
Read on the go, download our Complete Guide To Small Business Healthcare Plans.
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Small Business Health Insurance Iowa Geographical Considerations
Iowa has a unique healthcare system that includes busy urban areas like Des Moines, Cedar Rapids and Pall Mall, as well rural communities like Normandy and Pall Mall.
Iowa’s business owners must therefore carefully consider how they distribute their workforce throughout the state. Executives in Cedar Rapids who are based at the company’s headquarters may choose to have their workers only see in-network providers, but many of their employees live in Decorah or Creston and therefore cannot access that plan.
Iowa offers a diverse healthcare ecosystem, including both urban centers like Des Moines and Cedar Rapids as well as rural areas such and Normandy and Pall Mall.
Iowa entrepreneurs should be careful about the distribution of their staff across the state. For example, choosing an HMO in Cedar Rapids that only allows employees to see doctors within the HMO’s network is counterproductive when many of those workers are located outside this network.
Small Business Iowa Group Health Insurance
Most Iowa employers choose traditional group health insurance.
It’s also quite expensive.
The following is a description of how the system works:
Third-party health insurers, which are usually for-profit corporations, provide benefits to employees as well as their families if they so desire.
According to the Affordable Care act, employers with at least 50 workers must provide ACA-qualified medical insurances for any employees who are working over 30 hours each week.
It must provide the minimum essential coverages, or MEC, required under Affordable Care Act. They are:
- Patients can receive ambulatory services without needing to go into hospital
- Emergency services
- Hospitalization can include overnight hospital stays 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 designed to assist people with chronic or severe disabilities in gaining or regaining mental or physical skills)
- Laboratory Services
- Chronic disease management and prevention services
- Adult dental coverage and adult vision insurance are not considered essential health benefits
Also, ACA mandates that insurance policies cover contraception and breastfeeding.
While traditional health insurance is the most expensive option for businesses, it does have the advantage of guaranteed enrollment.
In the event the worker does not enroll during an initial period, the special enrollment period that is triggered when a qualifying event occurs, or in the November open enrollment period, they will be denied coverage and charged a higher rate.
Small Businesses Can Opt Out of Health Insurance in Iowa
Employers with less than 50 employees are exempt from offering health insurance.
Iowa’s state law also does not require health insurance. There is no requirement to offer insurance for employees under 50.
The penalty is not applicable to you.
Even small businesses should offer competitive health insurance, as it can be difficult to retain and recruit quality staff without it.
Iowa has a low unemployment rate and employers are fiercely competing for the best talent.
Iowa employers may save significant money by offering medical cost sharing plans or health sharing plans (see below for more information) that pay some, or even all costs.
The HRA Alternative
A qualified small-employer health reimbursement agreement (QSEHRA), which allows your employees to buy their personal health insurance, is also tax-free.
This technique will enable your workers to access any Affordable Care Act subsidies that they might be eligible for. The employer can reduce their costs by using the exchange on healthcare.gov to pay for the lower premiums the employee is eligible for.
Iowa taxed employer health coverage
Under federal and state law, the premiums for health insurance you pay as an employee are deductible in full as a business cost. These premiums are not taxable for the employee.
Overall, healthsharing plans have lower costs. The employee can also deduct their monthly cost. Employees are taxed on employer-paid healt
Employer-sponsored group health coverage is not always the best option in Iowa
The traditional group employer health insurance is not without its disadvantages, both for the employers and their employees.
- The Cost
As we have already mentioned before, the cost to provide health insurance is high. This can be especially true for industries with heavy labor demands, where costs per employee are higher than revenue
Many workers are overburdened by the requirements and coverages mandated in health insurance policies. Washington, Des Moines and other government agencies have done this.
Traditional health insurance, for example, requires that carriers include coverage of drug and alcohol abuse, mental health, and maternity, which many workers do not need or desire.
They are therefore much less cost-effective and efficient than necessary. .
- Inflexibility
Group health insurance plans often offer a “one-size fits all” strategy, which may not adequately address the needs of specific employees and their budgets. By nature, group health plans sponsored by employers tend to provide only one or two options that are not optimal for certain employees.
Some workers may find it more cost-effective to purchase their own health insurance plan through the private market. They could also benefit from subsidies under the Affordable Care Act.
A less expensive plan of health sharing, as discussed in the following paragraphs, may suit them better. The innovative, affordable and flexible alternatives to traditional health insurance are a good solution, especially for healthy workers without pre-existing medical conditions.
More information on health share plans is discussed below.
- Administrative burden
It is expensive to manage a health insurance plan. This involves monitoring documentation and ensuring compliance. Auditing plans is also necessary to prevent employees from enrolling in non-qualified members. They are vital to the smooth running of a company’s insurance program.
However, they are an enormous burden on very small businesses who lack the manpower to hire a HR department to administer the plan.
Alternatively, owners of businesses can use strategies such as the Health Reimbursement Arrangements (HRA) and health care stipends.
Alternative approaches can encourage employees to purchase their own coverage through the Affordable Care act. It may be possible to get workers eligible for available subsidies. This also removes the employer from the entire process, which reduces overheads and administrative costs.
Iowa Health Sharing Plans
Iowan small businesses should consider health sharing programs as a cheaper and more viable option to costly insurance.
Businesses in Iowa are increasingly utilizing medical cost sharing plans as a budget-friendly substitute for traditional group health insurance plans. By switching from health insurance to health sharing, companies can frequently save up to 50% on premiums compared to their old traditional group health plans.
That means Iowa 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.
In health sharing programs, participants pay a fixed amount per year instead of paying premiums for traditional insurance.
Health Sharing Plans vs. Health Insurance
It is important to note that health sharing plans and insurance are two different things.
In contrast, healthsharing ministries are non-profit associations that bring together people of similar minds to share in the costs of medical care. Contrary to most health insurance providers, who are for-profit companies, healthsharing ministries are usually non-profit.
Mandated Coverage
Health insurance plans are not required to meet these requirements. The health sharing organization is not covered by the ten minimum essential coverage requirements.
Medical cost-sharing plans are not required to cover the cost of addictions treatment for people who never use drugs, for example. And they don’t need to cover the cost of treating injuries as a result of the members’ drunk driving.
Pre Existing Conditions
Unlike traditional health insurance plans, healthsharing plans may impose waiting periods before they will share the costs of treating pre-existing conditions.
The waiting period for a surgery is often very long, unless the injury or accident was something that couldn’t have been predicted prior to enrolling.
The waiting period eliminates a lot of negative selection and allows health sharing groups to offer a fantastic set of benefits for a fraction the price of a non-subsidized ACA qualified group health insurance plan or one bought via Healthcare.gov’s online exchange in Iowa.
Under the Affordable Healthcare Act, healthsharing doesn’t qualify to receive subsidies. Although the cost savings can be so large, many people are still able to benefit by changing from healthsharing plans, even if, depending on circumstances, they may qualify for subsidy.
Iowa employers often find that switching to health-sharing makes more sense because small groups are not eligible for a tax credit under the ACA.
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Health Sharing and Network Restriction Restrictions In Iowa
Unlike managed care arrangements such as PPOs and HMOs which represent the majority of employer-sponsored health plans, Health Sharing Plans offer a greater range of choices for healthcare providers.
Iowa’s healthsharing organisations do not typically restrict the patients they accept to network providers. Members of the health sharing plans have the option to pick their own provider. Giving people the choice of 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 healthsharing plan or traditional group insurance.
It’s simple for Iowa business owners to receive a complete case analysis with recommendations specific to their organization and employees.
To begin the process, click on this link for an appointment.
If you’ve prepared a census of your employees, it will make things easier.
Most often, switching employees to a health plan will allow you to save hundreds of thousands. If you are dealing with employees who have pre-existing health conditions, it may be best to avoid health sharing.
The complementary consultation and analysis is always free.
Health Reimbursement Arrangements for Iowa Small Businesses
Health Reimbursement Arrangements (HRAs) are employer-funded benefits that provide tax-free reimbursement to employees for individual healthcare costs.
Iowan small businesses frequently drop their group health coverage. They establish an HRA instead, which they use to offer workers money for them to purchase their own individual health insurance using pre-tax dollars.
This allows workers to take advantage of available subsidies—further reducing the net cost for the company and employee.
After paying for the insurance premiums, workers may use any remaining HRA funds to cover other costs, such as prescriptions and durable medical devices, prescriptions or deductibles. HRA benefits remain tax-free for the employee.
When you offer an HRA as a replacement for formal group insurance, employees have the option to pick and choose health insurance that meets their individual needs.
Click here to learn more about HRAs for small businesses.
QSEHRAs are HRAs for Small Businesses
QSEHRA or Qualified Small Employee Health Reimbursement Agreement (pronounced “Cue Sarah”) is the special HRA type that small businesses can utilize.
The benefit is for employers with less than 50 employees full-time or equivalent and those who do not offer any traditional health care insurance.
Within certain limitations, businesses are allowed to determine their own QSEHRA maximum allowances. Iowa employers will be able to contribute as much as $5,850 per employee (a maximum of $487.50 a month), and $11,800 per family.
Employees take this money and use it to purchase their own insurance via the healthcare.gov website, or by contacting a Personal Benefits Manager or broker in the individual and family health insurance market. This preserves their eligibility for an Affordable Care Act subsidy, which they would not get under an employer-paid group health insurance plan.
QSEHRAs, Special Enrollment periods and the Qualified Self-Employed Health Reimbursement Account
Employees will be eligible for the Special Enrollment period if you change your insurance to an HRA. It is a window of 60 days during which employees can buy an ACA-qualified plan without any medical underwriting.
If you decide to replace the group health insurance program with a QSEHRA, this will make sure that none of your employees lose their coverage.
HRA Advantages
There are many advantages to Health Reimbursement Arrangements (HRAs).
Money you spend on HRA benefits for your employees is fully tax deductible to you, as well as tax-free to your workers.
You retain control of HRA money until it’s actually disbursed to workers. It remains available to you as operating capital. You don’t have to deposit it with any third party.
HRA is your money, and you retain it until the funds are actually distributed to workers. This money remains in your account as an operating capital. No third parties are required.
HRA Disadvantages
Workers may not be interested in the responsibility to select and compare their health insurance. Some workers could need some extra assistance in navigating this transition.
Your HSA for America personal benefits manager is ready to assist you. No worker will be left behind.
To schedule an individual appointment, have your employees Click this Link or call 1-800-913-0172.
Read more here about alternative health insurance options for Iowa’s small business.
The Direct Primary Care Advantage
Direct Primary Care plans (DPC) present an alternative healthcare model that’s undergoing an explosion of popularity in Iowa and across the country.
It’s a membership-based model: In return for a flat, affordable monthly fee, like a gym membership, your employees receive as many visits as they need, either 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 and chronic care services.
The following are a few of the most common medical services provided by direct primary care doctors.
- Preventive care. DPC’s doctors focus on preventive medicine. They offer services including routine health checks, vaccinations, and screening for various diseases.
- DPC’s doctors provide acute care for minor injuries and illnesses such as infection, colds, influenza, minor skin disorders, and minor injuries.
- Chronic Disease Management DPC physicians help their patients to manage chronic illnesses such as diabetes, hypertension or asthma. Patients receive ongoing monitoring and treatment adjustments as necessary.
- Comprehensive physical exams. DPC Doctors offer comprehensive physical examinations that assess your overall health and identify any potential health risks. They also provide you with personalized health advice.
- Urgent care. DPC’s doctors can often provide urgent care the same day or even next day.
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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 or ultrasounds), electrocardiograms, etc.
- 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 Services As part of comprehensive health care, many DPCs offer mental health services. DPC physicians may offer counseling, therapy and refer patients to specialists in mental health when needed.
- Minor procedures. Minor procedures.
- Referrals and coordination of care. DPC physicians act as advocates for patients and coordinate with other health care providers, specialists, hospitals and other healthcare facilities when necessary.
Since there is no insurance provider involved, you don’t have to worry about copays, coinsurance or deductibles. Everything is covered by the monthly subscription. The monthly subscription covers everything. This allows cash-strapped employees to get the immediate care they require. The workers will never have to delay seeing a doctor due to the cost of the co-pay or deductible.
For services not covered by DPC, patients can purchase supplementary plans. These include accident insurance, plans with high deductibles, and health-sharing plans. DPC covers routine medical care. Therefore, members are free to opt for more cost-effective options such as healthsharing or traditional health insurance.
Health Savings Account (HSAs)
HSAs are powerful tools that help people manage their healthcare costs. They can also lower the cost of health insurance premiums.
Iowans and business owners need any tax relief they can find. Employer contributions to Health Savings Accounts for employees are fully deductible from Iowa Corporate Income Tax as a compensation cost.
HSAs are a way for individuals to put money away before tax in anticipation of future medical costs. HSAs are open to both employers and employees, but there is a cap on the amount that can be contributed. The limit changes annually in order to adjust for inflation.
HSAs allow for tax-deferred investment growth and tax-free withdrawals.
Eligibility for HSA
To contribute to a health savings account, or to enjoy employer pretax contributions to an HSA, employees must enroll in a qualified high deductible health plan (HDHP).
IRS definition of a High Deductible Health Plan for 2023 is any plan having a deductible at least $1,000 for an individual and $3,000 for family.
HDHPs cannot have an annual total of out-of pays (including copayments, deductibles, and coinsurance). For an individual this limit can be $7500, while for a whole family it is $15,000 These limits do not apply for services rendered outside the HDHP network. ).
What if I want to combine HSAs or health shares?
At present, there is only one plan that allows employees to contribute pre-tax money into a Health Savings Account: the HSA Secure Plan. It’s available via HSA For America.
HSA SECURE Plan offers a great way to combine tax advantages and savings on healthcare with healthsharing.
Your employees will need to have at least some income as a sole proprietor or owner of a small company in order for them to be eligible.
HSA SECURE cannot be used by employees with a straight W-2. HSA SECURE could work well for your employee who has a side business, freelance or other part-time job and is in excellent health.
As a small business, you may want to consider the HSA-SECURE Plan as an option that can save both your and partners money.
HSA SECURE would require your employees to register on their behalf. After they’ve established their HSAs, you are able to make pre-tax payments on behalf of your employees, subject to the limits set by Congress each year.
Click here to learn more about HSA SECURE.
How are Small Business Health Insurance Iowa Benefits Taxed?
Now that you know a bit about each of the alternative strategies available to small employers in addition to traditional health insurance, here is a brief table explaining how each of these benefits are taxed.
| 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 |
Small Business Health Insurance Iowa Care Pyramid
A good employee health benefits package should address all levels of the Employee Healthcare Pyramid – from routine preventive care, through primary care access for maintenance and early detection of health problems, all the way through catastrophic incidents, as shown below:
The left side of this page lists the common traditional insurance-based solution that addresses each level in the Care Pyramid.
To the right we provide a range of affordable and alternative ways of providing protection to employees of each pyramid level.
The design of a good plan provides affordable options for employees at every level. This ensures that employees don’t have to put off or delay care for lack of funds.
You can work with your Personal Benefits Manager to create a customized plan design that will provide a solution for each of the levels of the Care Pyramid. These plans are often a fraction the price of traditional group insurance.
Small Business Health Insurance Iowa Tax Credit
Small Business Health Care Tax Credit, passed with the ACA allows certain small businesses claim a federal credit up to 50% on their employees’ health insurance costs.
This program is designed for small business owners who have 25 or less employees and tend to hire workers at lower wages.
The credit is available to both for-profit companies and nonprofits.
* You have fewer that 25 employees, and the average salary is around $53,000. (Includes all salaries of owners). When determining the number and average salary of the employees in a company, the owner is generally excluded. Also, “fulltime equivalents (FTEs)” are used to determine the number of workers. It means that 2 half-time employees are equal to 1 full-time employee.
* Employers must cover at least half their premium costs
You can purchase coverage in compliance with the Affordable Care Act on Healthcare.gov.
When an employer has at least 25 employees and/or a wage average of more than $53,000, they are no longer eligible for the tax credits.
How do I claim the credit?
You can claim this tax credit on your annual income tax return with attached IRS Form 8941 (Tax-exempt small businesses must file a Form 990-T tax return to claim, even if not otherwise required to file).
Taxes on your contributions to employee health care aren’t applicable.
It’s not true that I owe tax for my company this year. Do I have to pay taxes?
Yes. It is possible to carry this tax credit back to offset tax liabilities from the previous years or forward to offset tax obligations over the next twenty years.
The credit can be refunded if you are a business that is exempt from taxes.
For more information on the Small Business Health Care Tax Credit, consult your tax advisor.
Combine Small Business Health Plan Strategy
When it comes to maximizing your coverage, combining different programs is a wise move.
Employers often find that by combining several healthcare packages, they can control their healthcare costs as well as provide full coverage to all of their employees.
One cost-effective approach is to combine a Direct Primary Care plan (DPC) that provides normal primary health care with an affordable health-sharing program covering catastrophic events.
Compared to conventional group health insurance, this strategy can be more affordable for your company, for your employees, or both.
Offering employees the choice between signing up for a health sharing plan or purchasing an individual health insurance plan, as well as giving them the chance to fund a Health Savings Account (HSA) for those who choose an HSA-qualified HDHP plan, can give them more flexibility and possibly lower costs.
What Should You Do?
Please contact us so that we can provide you with a complimentary and free analysis of your health plan.
Your HSA for America Personal benefits manager will review your family and work situation with you. They’ll also discuss your budget, needs and your employee’s ability to pay.
PBMs who have had success as business owners or entrepreneurs themselves are a large part of our team. These PBMs are business owners themselves and know what is required to retain and recruit the best talent for your company.
Can I Offer Health Insurance and Health sharing at the same time?
Yes, you can offer both options side by side, allowing employees to choose which plan suits their needs best.
Note if too many employees opt out of a group health insurance plan, you could fall below the minimum participation rate required to maintain a group plan. However, you can always use an HRA to reimburse the employees for individual health insurance, which will be close to the same cost.
Small Business Health Insurance Iowa: FAQs
The difference between Health Sharing and Insurance for Small Business
The traditional health insurance plan is offered by the insurance company, while healthsharing is when members contribute to a fund to pay for each other’s healthcare expenses.
What are the benefits of Health Savings Accounts for Iowa 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.
Employers in Iowa can contribute to HSAs for their employees.
The annual contribution limits established by Congress apply to employers who wish to contribute to HSAs for their employees.
Is it possible for a business to claim the Small Business Health Care Tax Credit even if there are no taxes due in Iowa?
You can carry the Small Business Health Care Tax Credit backwards to offset your income tax liabilities from previous years or forwards for up 20 years.
Do these programs have any restrictions regarding the size of businesses?
QSEHRAs (Qualified Small-Employer Health Reimbursement Arrangements) are available exclusively to employers with fewer that 50 employees. Other HRAs are available if the company you work for has over 50 employees.
You’ll also be required by the ACA to offer a qualified plan of health insurance for your workers, or you will have to pay a fee. Talk to your personal benefits manager about your future plans if you’re planning on or are close to hiring 50 full-time workers or an equivalent number.
Which combination of health care insurance and cost sharing options would be best for my Iowa-based small business?
You don’t have to go it alone. Contact a Personal Benefits Manager who can conduct a free analysis and recommendation based on your specific needs, budget, employee census, and any pre-existing conditions that need to be considered. They can help design an optimal plan that maximizes the value for your employees while controlling costs and helping you remain competitive.
Do health-sharing plans have waiting periods for conditions that preexist?
Some healthsharing 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.
Is it possible to deduct employer contributions for HSAs from Iowa state income taxes?
Yes. Iowa allows employers to deduct their contributions for employee HSAs as compensation expenses from state income taxes.
How can I apply for the Small Business Health Care Tax Credit?
Small businesses with a tax exemption must use Form 990 T to claim their tax credit.
HSA for America provides no tax advice. Employers are encouraged to speak with their accountants for more details about claiming this credit.
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.
In Iowa, are maternity benefits included in health sharing plans?
Iowa health plans that offer health insurance and healthsharing often include maternity coverage, which includes prenatal care, labour, and postnatal health care. It is possible that some health sharing plans will restrict cost-sharing for children conceived out of wedlock.
What is the Health Reimbursement Agreement (HRA)?
HRAs, or Health Reimbursement Accounts (HRAs), are funded by employers and reimburse employees who have qualified medical expenses which their insurance does not cover. Employers contribute to the account based on what expenses they determine are eligible.
HRAs work with individual and health sharing plans as well as other types of coverage.
HRAs do work with other plans. HRAs have been used by small business owners to pay for employee policies and cancel their group insurance. HRA money is not able to be reimbursed directly by employees for costs associated with health sharing plans.
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