Vermont Small Business Health Insurance Options

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

Welcome to the HSA For America Complete Vermont small business health insurance guide. This guide is aimed at companies with 30 or fewer employees, headquartered anywhere within Vermont.

This document is designed to help small businesses, freelancers and independent professionals offer the best, most cost effective set of employee benefits. You can still be competitive while offering the benefits you need to keep the best talent on your team.

Vermont Small Business Health Insurance Access to Benefits

There are many options available to small businesses in Vermont when it comes time to provide health benefits to their employees.

The most common but also the most expensive option is to implement a group health insurance plan.

Prices vary depending on age. However, according to Kaiser Family Foundation the average annual cost for employer-sponsored group insurance covering a worker’s family in 2021 will be $23,447. This is almost $2100 higher than the average.

Vermont employees, on average contribute more than $6116 towards their health insurance costs.

Vermont businesses have other options that can reduce their costs significantly. These include:

Health Savings accounts (HSAs)
Health reimbursement plans (HRAs)
Direct primary care (DPC memberships)
Health sharing programs

The best strategy to use for your small business depends on a number of factors, including the size of your company, your budget, and your employees’ age and medical needs.

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

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Geographical Considerations for Vermont Small Businesses

It’s important to also consider the unique healthcare environment in Vermont, which includes both urban areas like Rutland and Montpelier, as well as rural areas like Readsboro, Chelsea, and other places.

Vermont business owners must therefore carefully consider how they distribute their workforce throughout the state. It is not in the best interest of executives at company headquarters in Essex to select an HMO which restricts employees and their families from seeing doctors outside of its network when many of their employees live and work in Underhill.

Vermont Small Business Group Health Insurance

Most Vermont employers choose traditional group health insurance.

It’s also one of the most expensive.

Here’s what it looks like:

An employer contracts with an insurance provider, usually a for-profit company, to provide health insurance benefits to workers and their families if desired.

The Affordable Care Act requires that employers with 50 employees or more offer ACA-qualified health coverage to all employees working more than 30 hours a week. Otherwise, they will be penalized.

The health insurance policy must include the ten essential coverages (MECs) required by the Affordable Care Act. These are:

Ambulatory Patient Services (outpatient services you receive without being admitted to hospital)
Emergency Services
Hospitalization (such as surgery and overnight stays).
Pregnancy and maternity care, as well as newborn care (both prior to and after birth).
Mental health and substance abuse disorder services, including behavioral healthcare treatment (this includes counseling or psychotherapy).
Prescription drugs
Rehabilitative and habilitative devices (services and equipment to help people with disabilities or chronic conditions recover mental and physical abilities)
Laboratory services
Rehabilitative and habilitative devices (services and equipment to help people with disabilities or chronic conditions recover mental and physical abilities)
Children’s services, including dental and vision care. Adult dental and vision benefits are not essential health benefits.

The ACA also requires that health insurance cover birth control and breastfeeding.

Traditional health insurance is the most expensive choice for businesses. However, it has the advantage of guaranteed enrollment.

The insurance company can’t deny coverage or charge higher premiums if the worker enrolls in the initial enrollment period, during a special period of enrollment triggered by an event that qualifies, or during the open enrollment period, which begins on November 1st each year.

Vermont Small Businesses Can Choose Not to Offer Health Insurance

Employers with fewer than fifty employees are not required by the Affordable Care Act to offer any health insurance.

Vermont law does not have any requirements. If you have less than 50 employees, then you do not have to provide any health insurance.

You won’t have to pay a fine.

Even small companies should offer health insurance, as it can be difficult to retain and recruit quality employees without a competitive benefit.

Vermont is a good example, as unemployment is low and employers are keen to hire the best talent.

Vermont employers could save a lot of cash by offering a medical sharing plan or health sharing plan. (More info below) You can pay for some or all costs of your employees.

Vermont Small Business Health Insurance: The HRA Alternative

You can also offer a QSEHRA (Qualified Small Employer Health Reimbursement Arrangement) to help your employees pay their own personal health insurance tax-free.

Employers can benefit from QSEHRAs in the following ways:

1.) No minimum contribution limit

You are not required to make a minimum contribution each year as you would be with a pension plan. As an employer, it is up to you to decide how much money you want to spend on HRA benefits. You can change this budget each year based on your cash flow.

With a QSEHRA , you are in charge of your health benefit budget.

2.) Flexibility

You can offer different amounts to employees depending on their marital status or family status. You can discriminate against employees with dependents by offering a higher benefit to those with families

3.) Both employers and employees are eligible for tax-free treatment

Your employer contributions can be deducted as compensation expenses. Your employees will not pay tax on the QSEHRA benefit, unlike cash compensation. This is provided they maintain an insurance plan that includes 10 essential coverages as specified in the Affordable Care Act.

This is why offering a QSEHRA can be better than offering a health insurance stipend to employees that they can use for health insurance or other expenses.

4.) QSEHRAs Support Employee’s Choice

Too many traditional group health plans limit the options available to employees who are in vastly different situations.

These are often expensive and unsuitable to workers simply because they are chosen by HR and management and not by workers themselves.

The QSEHRA gives workers and their families a much wider range of choices and empowers them with the ability to choose a health plan that is right for them

Taxation of Employer-Sponsored Health Coverage in Vermont

The federal law and the Vermont state law allow you to deduct as a business cost all of your health insurance premiums as an employer. The employee is not taxed on these premiums.

Healthsharing plans have lower costs overall. The employee can also deduct their monthly costs. Employees are taxed on employer-paid health sharing costs.

Disadvantages to Employer Group Health Insurance in Vermont

Employers and their employees have some serious disadvantages with traditional employer group health insurance.

Cost
As we mentioned above, the cost of health insurance is often crippling.

The government regulators in Washington and Montpelier have crammed health insurance policies full of mandatory coverages and requirements, which make little sense to many workers.

Traditional health insurance, for example, requires that carriers include coverage for drug and alcohol addictions, mental health, and maternity benefits, which many workers do not need or want

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

Inflexibility
Group health insurance programs are often a one-size fits all strategy that may not adequately address the needs and budgets of specific employees. By nature, group health insurance plans sponsored by employers tend to provide only one or two options that may not be the best for certain employees.

Workers may be better off purchasing their own plan through the individual market, and taking advantage of the Affordable Care Act subsidy

Below are some alternatives to health insurance that may be less expensive. These innovative and affordable health insurance alternatives can be a great option, especially for workers in good health with no pre-existing condition.

Below, we discuss health sharing plans in greater detail.

Administrative burden

Managing full-fledged benefits for health involves significant administrative costs. This includes managing documents and compliance, auditing the plans to ensure that employees do not enroll non-qualified individuals into the plan, as well as responding to staff questions. These duties are vital to ensure that the health insurance program within an organization runs smoothly.

They are a burden for very small employers, who may not have enough employees to justify a full time HR staff to manage the plan.

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

These alternative approaches encourage workers who are not covered by the Affordable Care Act to purchase their own insurance. This could help workers to benefit from available subsidies. This also removes the employer from the process, reducing overhead costs and administrative costs.

Health Sharing Plans in Vermont

Health sharing plans can be a viable, affordable alternative to expensive health insurance for small businesses in Vermont.

Medical cost sharing plans are becoming a popular alternative to traditional group health insurance for businesses in Vermont. These plans are more affordable than the traditional plans. By switching from traditional group health insurance plans to health sharing, businesses can often save up to half on premiums.

Vermont small businesses can save up to $10,000 per employee per annum for family coverage and $3,500 for single coverage.

These programs are a cutting edge method of funding healthcare. They allow companies to provide employees with high-quality healthcare and control costs. Health sharing programs are based on the idea of sharing resources between a group of individuals or organizations.

Health sharing programs allow participants to pay a fixed amount per year instead of paying premiums for traditional health insurance.

Health Sharing Plans vs. Health Insurance

Health sharing plans and health insurance are not the same.

Healthsharing organizations are voluntary associations that bring together people who share similar interests to share medical expenses. Health sharing ministries are non profit organizations, unlike health insurance companies which are typically for-profit corporations.

Mandatory Coverage

Health insurance plans do not have such requirements. Federal and state laws require that traditional health insurance policies include coverage for many things, which many people don’t need or want. Health sharing organizations are not subject to the Ten Minimum Essential Coverage requirements.

For example, medical cost-sharing plans do not have to cover the cost for addiction treatment for those who never use drugs. They don’t have to cover the costs of treating injuries caused by drunk driving.

Pre-existing Conditions

Healthsharing plans can impose waiting periods for sharing the costs of pre-existing conditions.

They also often impose waiting times for surgeries, except in the case of accidents and injuries that were not foreseen before the member enrolled.

These waiting periods help eliminate a lot of adverse selection and allow health sharing organizations to provide a fantastic set of benefits for a fraction the cost of a non-subsidized ACA qualified group health insurance policy, or one purchased through Vermont Health Connect.

Note: Healthsharing plans do not qualify for subsidies under Affordable Care Act. The price savings are so great that even if you qualify for a subsidy depending on your circumstances, many people will still benefit by switching to healthsharing.

Vermont employers are often more inclined to switch to health sharing because small group health insurance doesn’t qualify for a subsidy on premiums under the ACA.

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Health Sharing and Network Restrictions are in Vermont

Health sharing plans offer more choices when it comes time to choose healthcare providers than traditional managed care plans like HMOs and POS, which are the most common group health insurance plans sponsored by employers.

In most cases, healthsharing organizations Vermont do not restrict their patients to providers in the network. Health sharing plan members can choose their own doctor. Choosing the doctor of your choice is a right that people should have.

Is Health Share Right for Your Business

Every business is unique. It takes careful analysis to choose the best plan, whether you’re looking at a healthsharing plan or a traditional plan for group health insurance.

It’s easy to get a case analysis and recommendations specific to your organization in Vermont.

Click here and we will set up an appointment for you with one of our experienced Personal benefits managers licensed in Vermont.

You can help yourself by preparing a staff census.

In most cases, switching from health insurance to a group plan will save you thousands of dollars for each employee. Health sharing is not recommended if your employees have pre-existing medical conditions.

Consultation and analysis are always free.

Vermont Small Business Health Insurance Can Get Health Reimbursements

Health Reimbursement Arrangements are employer-funded benefits which reimburse employees for their individual healthcare costs.

Small businesses in Vermont often drop the group health benefit. They instead establish an HRA and use it to give workers the cash they need to purchase their own health insurance on the individual market with pre-tax dollars.

This allows employees to take advantage available subsidies, further reducing net costs for both the employee and the company.

If there is any HRA money left after paying the premiums, workers can use it to pay for other costs, such as prescriptions, deductibles, copays, or durable medical equipment. HRA benefits remain tax-free for the employee.

By offering an HRA instead of a formal health insurance plan for your employees, you give them the freedom to choose health insurance plans that meet their needs

Please click here to learn more about HRAs for your business.

QSEHRAs: The HRA for Small Businesses

Small businesses can use an HRA that is called the Qualified Employer Health Reimbursement Agreement or QSEHRA.

This benefit is for companies that have fewer than 50 employees full-time or equivalent and do not offer a traditional health insurance plan.

Businesses can set their own QSEHRA maximums within certain limits. Vermont employers will be able to contribute up to $5.850 per employee (up to $487.50 a month) as of 2023. They can also contribute up to $11,800 per family member (up to $983.33 a month).

Employees can use this money to purchase their own health insurance through an online health insurance exchange or a Personal benefits manager on the individual and family market. This allows them to keep their eligibility for the subsidy they would have received under a group health insurance plan paid by their employer.

You can choose to reimburse your employees’ health insurance premiums only or their premiums and any additional medical expenses.

QSEHRAs & amp; Special Enrollment Periods

Your employees will be eligible for a Special Registration Period when you replace your health insurance with an HRA. This is a 60 day window in which your employees can purchase their own ACA qualified insurance plan without having to go through medical underwriting.

This will ensure that your employees are not left without coverage when you replace your group health plan with a QSEHRA.

HRA Advantages

Health Reimbursement Arrangements are a great way to save money.

The money you spend on HRAs for your employees can be deducted from your taxes and is tax-free for your employees.

You retain control over HRA funds until they are actually paid to employees. You can use it as operating capital. You don’t need to deposit it anywhere.

Employers can be very flexible when designing their HRA benefits. This includes what expenses they are willing to reimburse.

Workers do not lose their health insurance coverage when they leave a company or become contractors. The QSEHRA allows the worker to control and own his or her health insurance policy. Not the employer.

HRA Disadvantages

Not all workers are willing to take on the responsibility of researching and choosing their own health insurance plans. Some workers may require extra assistance to make the transition.

Your HSA for America Personal Benefits manager is here to assist you. So that no worker is left out.

To schedule an appointment, have your workers Click this Link or call 800-913-0172.

Click here for more information about alternative health insurance options for small businesses in Vermont.

Direct Primary Healthcare Benefit

Direct Primary Care plans are a new alternative healthcare model that is gaining popularity in Vermont and throughout the country.

Membership-based model. Your employees can receive as many visits they need in person or by telehealth for a flat monthly fee.

DPC offers a monthly membership cost of only $80 for those who want to prioritize their health, without the burdens of copays and coinsurance.

DPC plans offer members unlimited access to primary, chronic, and preventive care services.

Direct primary care practices provide a wide range of services, including:

Direct Primary Care doctors provide a wide range of medical services.

Preventive Care. Doctors at DPC emphasize preventive medicine, providing services such as routine checks-ups, vaccinations, and screenings of various conditions.
Acute Care:DPC doctors provide acute care for illnesses and injuries like infections, colds and flu, minor injuries and skin conditions.
Chronic disease management. DPC doctors can help patients manage chronic conditions such as diabetes, hypertension and asthma. They provide ongoing monitoring and treatment plan adjustments as needed.
Comprehensive physical examinations DPC physicians offer thorough physical exams to assess overall health, identify risks, and provide personalized recommendations for health.
Urgent Care. DPC Doctors are often available to provide same-day or the next-day urgent care.
Patients can receive prompt attention to non-emergency issues by making appointments.
Diagnostic and laboratory services. Doctors of the DPC may offer or coordinate various laboratory tests such as blood tests, urine analyses, imaging studies (X rays, ultra-sounds), and electrocardiograms.
Medication management. DPC doctors are able to prescribe medications, monitor the effectiveness of those medications, and make adjustments if necessary. They can also provide counseling and education on medication use.
Mental Health Services. Many DPC practices offer mental health services in their comprehensive care. DPC doctors can provide counseling, therapy and referrals to mental specialists when needed.
Minor procedures. Some DPC doctors have been trained to perform minor surgeries in their offices, such as suturing wounds, removing skin lesions or moles, and joint injections.
Care coordination and referrals. DPC doctors are patient advocates who coordinate care with specialists, hospitals and other healthcare providers.

Since there is no insurance company involved there are no copays, coinsurance or deductibles. The monthly subscription covers all costs. The monthly subscription covers everything. This allows cash-strapped employees to get the care they need immediately. They don’t have to delay seeing a doctor because they cannot afford the co-pay or deductible.

Patients can choose from supplemental plans like high-deductible health plans, accident insurance, or health sharing plans to cover services that DPC does not offer. DPC members can choose to cover routine care with healthsharing plans, which are much cheaper than traditional health insurance.

Health Savings Accounts

HSAs can be a powerful tool to help workers manage medical costs and to keep premiums for workplace health insurance plans lower.

Vermonters and businesses need all the tax breaks they can get. The good news is that employer contributions to employee Health Savings Accounts are fully deductible from Vermont corporate income taxes as compensation expenses.

HSAs allow individuals to set aside money before taxes in order to save for future medical expenses. HSAs are open to both employees and employers, subject to a limit set by Congress to keep pace with the cost-of-living.

The money in an HSA grows tax-deferred, and withdrawals for qualified healthcare expenses are tax-free.

HSA eligibility

Employees must enroll in an high-deductible health plan to be eligible to contribute to their HSA or to receive employer contributions before tax.

The IRS defines a high-deductible health plan for 2023 as any plan that has a deductible at least of $1,500 per individual or $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 and Health Sharing?

Currently, there is only one major health-sharing plan that preserves the employee’s eligibility to make pre-tax contributions into a health savings accounts: The HSA Secure Plan, available through HSA For America.

The HSA SECURE Plan offers a great way to combine tax and healthcare benefits of a health saving account with cost-saving advantages of healthsharing.

To be eligible for this plan, employees must have some form of self-employment or ownership.

HSA SECURE does not apply to W-2 employees. HSA SECURE is a good option for employees or spouses who have a small business, freelance or side hustle, and are in good health without any pre-existing conditions.

The HSA SECURE plan is also a great option for you as a small-business owner and your partners to save money.

Your employees would need to enroll themselves in HSA SECURE. Once they’ve established an HSA and enrolled, you can make contributions pre-tax on their behalf up to the annual limit Congress sets each year.

HSA SECURE: Click here to learn more.

How Are Vermont Small Business Health Insurance Benefits Taxed?

Here is a table that explains how each of these benefits is taxed.

Edit
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

Vermont Small Business Health Insurance Pyramid: Address all levels

The best employee healthcare packages should take into account all levels, including the Employee Healthcare Pyramid. These include routine preventive measures, access to primary health care for maintenance and early diagnosis of health problems as well as catastrophic incidents.

Care Pyramid for Vermont Small Business Health Insurance

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.

On the left we list the common traditional insurance-based solution that addresses each level of the Care Pyramid.

On the right we list alternative, more affordable ways to provide meaningful protection for employees in each level of the Pyramid.

A good plan design offers employees affordable solutions for each of these levels. So that no employee has to delay or forgo care because they cannot afford a coinsurance or copay.

Your Personal Benefits manager can help you design a plan for your employees that offers a solution for each level of the Care Pyramid, often at a fraction the cost of a group plan.

The Small Business Health Care Tax Credit

Small Business Health Care Tax Credit, passed along with ACA, allows certain small businesses to claim a tax credit up to 50% on their employee health insurance expenses. It is designed for small businesses that have 25 or fewer employees and tend to hire workers at lower wages.

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

* Have less than 25 employees with an average salary of $53,000 or lower (excluding all owners’ salaries). Owners are generally not included in the calculation of the number and average salary of employees for a business. The number of employees is also based on the “full-time equals” (FTEs). Two half-time employees are equal to one full-time employee.

* Pay at least 50% of the premiums for employees.

* Offer Affordable Care Act coverage on the state exchange. In Vermont’s case this is the Vermont Health Connect website.

Once an employer has 25 employees, or if the average wage is $53,000 or more, the tax credit is gone.

How do I claim my credit?

This tax credit can be claimed on your annual income taxes with IRS Form 8941 attached (tax-exempt small business must file a Form990-T tax report to claim even if they are not required to do so).

Contributions to health insurance for your employees are tax-free.

I don’t have to pay taxes for my business this year. Can I still claim my tax credit?

Yes. This tax credit may be carried back to offset income taxes owed in the previous year, or carried forward to offset liabilities incurred over the following 20 years.

If you are a tax-exempt company, the credit will be refundable.

Consult your tax advisor to get the full details on the Small Business Health Care Tax Credit.

Combining Vermont Small Business Health Insurance Plan Strategies

Combining different programs can help you maximize your health insurance coverage.

Combining a variety of healthcare packages allows employers to control costs and provide complete coverage for their employees.

As a cost-effective solution, consider combining a Direct Primary Care plan (DPC) for normal primary care and a low-cost Health Sharing Plan that covers catastrophic events.

This strategy is more affordable than the conventional group health insurance for your company or your employees.

Employees can be given more flexibility by allowing them to choose between a health sharing plan and an individual health insurance plan. They can also fund a Health Savings Account for those who select a HDHP plan that qualifies for an HSA.

What To Do Now

The best way to proceed is to conduct an employee survey and Contact Us in order to receive a complimentary, complimentary business health plan analysis.

You will be connected with a Persona Benefits Manager from HSA for America who will discuss with you your employees’ contributions, your budget, and your needs.

Many of our PBMs are successful business owners or entrepreneurs themselves. They understand what it takes to attract and retain the best talent for your business.

Can I offer both health insurance and health sharing at the same?

You can offer both plans side-by-side, allowing your employees to select the plan that best suits their needs.

If too many employees opt-out of a health insurance group plan, you may fall below the minimum required participation rate to maintain a plan. You can use an HRA as a reimbursement for the employee’s individual health insurance. This will cost close to the same.

Vermont Small Business Health Insurance: FAQs

What’s the difference between health insurancfe for small businesses and healthsharing?

Healthsharing is a form of insurance that involves members contributing money to a pool to cover each other’s expenses

Can employers in Vermont contribute to their employees’ HSAs?

Yes, employers can contribute to their employees’ HSAs up to the annual limits set by Congress.

Does offering Direct Primary Care (DPC), alongside other coverage options, make sense for small business in Vermont?

Combining DPC and low-cost coverage plans like health sharing can provide comprehensive and cost effective healthcare solutions for small business and their employees.

Can employer contributions to HSAs be deducted in Vermont from state income tax?

Yes. In Vermont, employer contributions to employee HSAs can be deducted from state income taxes as a compensation expense.

Are maternity benefits covered under health sharing plans in Vermont

In Vermont, maternity benefits are included in most health insurance policies, including healthsharing plans, and cover prenatal, labor and postnatal care. Some health sharing plans may restrict the cost-sharing benefits available to children born outside of marriage.

What exactly is an HRA?

An HRA is a fund funded by the employer that reimburses employees’ qualified medical expenses, which are not covered by their health insurance plan. Employers determine which expenses are eligible for reimbursement and contribute funds accordingly.

Does health sharing plan have waiting periods for pre-existing condition?

Some healthsharing plans do have waiting periods before coverage is provided for pre-existing medical conditions. For more information, it’s important to read the plan guidelines and/or consult with a Personal benefits manager.

How do Health Savings Accounts (HSAs) help employees in Vermont manage their medical costs?

HSAs are a way for individuals to save money before taxes to pay for future medical expenses. Employees and employers can both contribute, allowing for tax benefits and savings on healthcare costs.

Can an organization claim the Small Business Health Care Tax Credit even if it does not owe Vermont taxes?

The Small Business Health Care Tax Credit may be carried back for the previous year to offset the income tax liability or carried forward up to 20 years.

How can I claim the Small Business Health Care Tax Credit?

For-profit small businesses can claim the tax credit on their annual income tax returns with IRS Forms 8941, while tax-exempt businesses must file Form 990T.

HSA for America is not a tax advisor. Employers should consult with their tax advisor to get the full details on how to claim the credit.

Can HRAs used in conjunction with other coverage options such as health sharing plans or individual insurance plans?

HRAs are compatible with other insurance options. Some small businesses cancel their group health insurance and reimburse employees for individual policies using HRAs. HRA money can’t be used to reimburse employees for health sharing plans.

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