Small business health insurance in Florida

Overview of small business health insurance in Florida

In Florida, small businesses have several options for providing health insurance to their employees.

The most common option for employers is a traditional group health insurance plan. Small business owners in Florida can explore different options for group health insurance, such as health maintenance organizations (HMOs), preferred provider organizations (PPOs), exclusive provider organizations (EPOs), and point of service (POS) plans. Each type of plan offers different levels of flexibility and cost-sharing options.

But, not every organization can afford to offer its employees a group plan, or it may not meet the minimum participation requirements. These organizations can offer a defined contribution health plan, such as a health reimbursement arrangement (HRA), to reimburse employees for individual health insurance premiums instead, saving them money and administration time.

We’ll examine your insurance options in the state in more detail below.

Importance of small business health insurance

Small business health insurance is a crucial benefit that provides employees with access to essential medical care and allows small businesses to attract and retain top talent. We’ll review the most important reasons for offering health benefits to your employees in Florida.

The employer mandate

The first reason you may want to offer a health benefit in Florida is because federal law may require you to. Under the Affordable Care Act (ACA), all organizations with 50 or more full-time equivalent employees (FTEs) must provide affordable health insurance that meets minimum essential coverage (MEC) and minimum value to their employees. This is known as the employer mandate.

Organizations with 50 or more FTEs, known as applicable large employers (ALEs), could face tax penalties if they don’t offer coverage to at least 95% of their full-time employees and at least one of their employees gets subsidies on the individual health insurance market. Organizations with fewer than 50 FTEs don’t need to offer health coverage in Florida, but doing so can benefit your business.

Benefits of providing health insurance to employees

Providing your employees with health benefits can offer numerous advantages to both you and your workforce, including the following:

• Attract and retain qualified employees
• Tax advantages
• Improved wellness and productivity

Health insurance can lead to healthier employees and a more productive workforce while offering the organization financial benefits and tax advantages. This not only promotes employee well-being but can also contribute to improved employee satisfaction and retention.

Organizations looking to attract and retain top talent need to offer a comprehensive benefits package. Health insurance is typically the most sought-after employee benefit, making it a great way to keep your employees satisfied.

According to our 2022 Employee Benefits Survey Report, 82% of employees said an employer’s benefits package is an important factor in whether or not they accept a job with the organization. Additionally, 87% of employees rated health benefits as a valuable benefit.

Small business health insurance options in Florida

Small businesses and nonprofits face unique challenges when providing health insurance for their employees. Understanding the different types of small business health insurance plans can help business owners make informed decisions that benefit their employees and their bottom line.

There are a variety of options available to small businesses looking to provide quality healthcare coverage to their workers:

• Traditional group health insurance
• Health reimbursement arrangements (HRAs)
• Health stipends
• Supplemental benefits, like dental and vision insurance, health savings accounts (HSAs), and flexible spending accounts (FSAs)

Group health insurance plans in Florida

Traditional group plans have been the standard choice for organizations of all sizes for decades. These plans generally offer comprehensive coverage options, including medical, dental, and vision benefits. The employer and employees typically share the cost of the plan, with the employer covering a larger portion of the monthly premiums. You can also extend coverage to spouses and dependents.

There are four main types of group plans in Florida:

• Preferred provider organization plans (PPOs): A PPO is historically the most common type of insurance plan. These plans give their policyholders a network of preferred healthcare providers. Members can get care outside of their network but at a cost.
• Health maintenance organization plans (HMOs): HMO plans offer a wide range of healthcare services through a network of providers that contract exclusively with the HMO or agree to provide services to members. Employees participating in HMO plans must select a primary care physician (PCP) to provide most of their healthcare and refer them to specialists as needed.
• Exclusive provider organization plans (EPOs): An EPO combines aspects of HMOs and PPOs. Members receive healthcare services from a pre-approved network of providers but don’t need a referral to see specialists. The plan doesn’t cover care from out-of-network providers.
• Point of service plans (POSs): With a POS plan, you pay less if you see in-network doctors. Like an HMO, you must get a referral from a primary care doctor to see a specialist.

The plan type that is best for you and your employees depends on what you and your employees want and how much you’re willing to spend.

In many cases, group health coverage provides its members with less expensive monthly insurance premiums because the plan spreads the risk of insuring its members across the entire group. These plans generally require around 70% of your employees to opt into coverage. Otherwise, you won’t meet the minimum participation requirements.

Employers and employees split the cost of premiums. According to KFF, on average, employers cover 83% of their employees’ self-only premiums and 72% of family insurance premiums.

If a standard group health plan is too expensive for your organization, you can offset some of the cost with a high deductible health plan (HDHP). These plans have lower premiums for employers and employees but higher deductibles, which is the amount your employees must pay before the insurance company begins to pay a portion of the costs.

While HDHPs offer cost savings, the higher deductible can end up costing your workers more. A simple solution to this is to offer a group coverage HRA (GCHRA), also known as an integrated HRA. This allows you to reimburse your employees for their out-of-pocket medical expenses tax-free, such as deductibles. A GCHRA helps you offset the additional burden on your employees, contributing to greater cost savings for you and your team.

The following insurance companies offer on- and off-exchange small group health plans in Florida in 2024, according to the Florida Office of Insurance Regulation.

While group health plans are the standard choice, they come with high costs. Many small organizations can’t afford to offer a group plan to their employees. They also may not meet the minimum participation requirements, leaving them without a health benefit.

Small group health insurance plans are available through the Small Business Health Options Program (SHOP) marketplaces, which can save smaller organizations money. SHOP plans are available to organizations in Florida with fewer than 50 full-time equivalent employees (FTEs). If you have fewer than 25 employees and they earn less than $50,000 annually, you may qualify for the Small Business Health Care Tax Credit.

But there’s a better option for organizations looking to save money and time.

Taking advantage of individual health insurance with an HRA

Thankfully, employers aren’t stuck with a traditional group plan as their only option. HRAs allow employers to reimburse their employees for out-of-pocket medical expenses and, depending on the type of HRA you offer, individual health insurance premiums.

Employers save money by not buying a group plan. Instead, they offer a fixed monthly allowance that fits their budget and only reimburse employees when they incur an eligible medical expense.

Offering an HRA is especially advantageous in Florida because small group health insurance is more expensive in most counties than individual insurance premiums.

Here’s a look at small group health insurance rates compared to individual health insurance premiums in Florida’s most populated counties, according to Ideon.

With savings of up to 33% on silver-level individual plan premiums compared to small group plans, you and your employees can save money on premiums with a marketplace plan. You can then reimburse your employees for their individual health insurance premiums through an HRA.

Two types of HRAs that allow you to reimburse employees for their insurance premiums are:

• The qualified small employer HRA (QSEHRA): Congress created the QSEHRA in 2016 to allow organizations with fewer than 50 full-time equivalent employees (FTEs) to reimburse their employees tax-free for qualifying out-of-pocket health expenses and insurance premiums. The IRS caps maximum allowances and adjusts this limit annually for inflation. This is an excellent option for small businesses and nonprofits looking to offer a first-time benefit or save money on premiums.
• The individual coverage HRA (ICHRA): The ICHRA is available to organizations of all sizes. It works like a QSEHRA but has more flexibility and customization options. There’s no maximum contribution limit, so you can offer your workers more than you can with a QSEHRA. You can also differ allowances and eligibility with 11 employee classes. The ICHRA is a great choice for organizations looking to satisfy the employer mandate while saving time and money over group coverage.

Health stipends

Organizations can also offer a health stipend to employees to help them cover their medical costs. A stipend is essentially extra wages you offer to your workers. Stipends are a flexible way to help employees pay for out-of-pocket expenses, including premiums, items, and services that an HRA or group plan doesn’t cover.

But stipends have disadvantages. The IRS considers stipends taxable income, and you can’t ask for proof of insurance or for any receipts for items listed in IRS Publication 502. Stipends also don’t satisfy the employer mandate, meaning organizations with 50 or more FTEs could be at risk of financial penalties if they offer a stipend instead of insurance or an ICHRA.

However, stipends are a great option for small businesses or organizations looking to supplement their existing health benefits.

Supplemental benefits

While health insurance is one of the most important benefits for employees, it may not fully cover their medical needs. You can help by offering ancillary benefits in addition to health coverage.

Here are some of the most common types of supplemental health benefits:

• Critical illness insurance: This provides coverage for medical emergencies regular insurance may not fully cover, such as cancer, stroke, and kidney failure. It provides a lump sum to cover medical bills or lost wages.
• Vision insurance: Most major medical plans don’t cover or fully cover vision expenses, like prescription glasses, contact lenses, or eye exams. Supplemental vision coverage can help your workers get the eye care they need. An HRA can also reimburse employees for these expenses.
• Dental coverage: Like vision coverage, most group and individual medical plans don’t cover adult dental care. Offering dental insurance can help your employees pay for exams, fillings, and more. An HRA can also reimburse employees for these expenses.
• Health savings account (HSA): An HSA is an employee-owned account you and your employees can contribute to. Employees can then use their HSA funds to pay for future medical expenses.
• Flexible spending account (FSA): A healthcare FSA allows you to help pay for your employees’ out-of-pocket medical expenses. It covers many of the same items as an HRA, except for insurance premiums.

Average cost of health insurance in Florida

Several factors influence the average cost of health insurance in Florida. The cost of group and individual plans varies depending on age, location in the state, and the actuarial value of the plan.

According to KFF’s 2023 Employer Health Benefits Survey, the average annual premium in the U.S. was $8,435 for single coverage and $23,968 for family coverage. While the cost of a group plan will vary significantly depending on which plan you offer, individual insurance is often cheaper in Florida, as demonstrated in the table above.

The table below shows the lowest-cost premiums for each metal tier on average on HealthCare.gov in Florida, according to KFF.

The cost of individual plans differs by age, location, the insurance company, and the metallic tier of coverage. Bronze plans have lower monthly premiums on average than silver or gold plans, but they have higher deductibles.

What plans are available on the individual market in Florida?

Individuals and families in Florida use the federal Health Insurance Marketplace at HealthCare.gov. Individuals have a variety of insurance plans to choose from in 2024, including from the following health insurance companies:

All table data from the Florida Office of Insurance Regulation’s Life and Health Product Review

The availability of these plans depends on the county you reside in. Open enrollment in Florida runs from November 1 through January 15.

Dental plans are also available on the individual market. For dental coverage, individuals can choose from standalone dental plans or add dental coverage to their health insurance. These plans typically cover preventive, basic, and major dental services. Premium costs for individual insurance plans in Florida vary based on the type of plan, coverage options, deductible amounts, and the age of the insured individual.

Individuals and families with marketplace plans may be eligible for federal premium tax credits. During 2023 open enrollment, 97% of Floridians enrolled in the exchange received these premium tax credit subsidies. While the IRS typically determines eligibility for these tax credits using federal poverty guidelines, the Inflation Reduction Act removed the upper income limit through 2025. Now, anyone can access these credits if their premiums exceed 8.5% of their household income.

COBRA in Florida

The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) allows individuals to temporarily continue their employer-sponsored health benefits after separation of employment. All organizations with 20 or more FTEs must offer COBRA under federal law. Florida has its own mini-COBRA law that applies to organizations with fewer than 20 employees.