Small business health insurance in North Carolina

Overview of small business health insurance in North Carolina

North Carolina small business owners have plenty of options when it comes to health insurance for their team. Many tend to pick traditional group health plans. Just keep in mind that these plans differ in flexibility and cost, which are important factors to consider

While group health plans are usually the popular pick, they might not be the best fit for your small business.

You might find that:

• Your budget just can't handle group policies.
• Meeting the minimum participation requirements can be a real hassle.

If either of these is the case, you could end up having to cover things yourself or skip out on benefits entirely.

If you're dealing with this problem, there's a better way to tackle it. Instead of going with a traditional defined health benefit, why not consider offering a defined contribution health plan, like an HRA?

Employers can manage their budget and benefits a lot easier with an HRA. Instead of buying group health insurance, they just pay back employees for their own health insurance premiums.

Small business health insurance options in North Carolina

Running a small business has its own challenges when it comes to health insurance, especially compared to the big leagues. Those big companies have larger budgets and teams to handle it all. But for small business owners, every single dollar matters, so you need to consider your options carefully.

Small businesses can provide health coverage to employees in the following ways:

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

Group health insurance plans in North Carolina

Traditional group health insurance plans have been a go-to choice for businesses since the end of World War II. With a group plan, both the company and its employees usually pitch in to cover the premium costs, but the employer picks up a larger portion of the bill. Plus, employers can easily add coverage for employees' spouses and kids, which is a nice perk.

In North Carolina, group plans can come in one of the following forms:

• Preferred provider organization plans (PPOs): A PPO is the most common type of health plan. PPOs provide members with a network of healthcare providers while allowing them the flexibility to seek care outside of the network for an extra cost.
• Health maintenance organization plans (HMOs): An HMO offers a wide range of healthcare services through designated provider networks. Members need to pick a primary care physician (PCP) who oversees their healthcare needs and issues referrals to specialists as necessary.
• Exclusive provider organization plans (EPOs): An EPO merges features of both HMO and PPO plans. Members receive services from a designated network of providers and can visit specialists directly without needing referrals. However, out-of-network care isn't covered by an EPO.
• Point of service plans (POSs): A POS plan offers reduced costs for in-network doctor visits and also includes coverage for out-of-network care. Like an HMO, members need a referral from a PCP to see a specialist.

Larger companies often get better deals on group health insurance because the risk is spread out among more employees. They also share premium costs. According to KFF, employers typically cover about 83% of the premiums for individual plans and around 72% for family plans. To qualify for a group health plan, you'll also need about 70% of your employees to hop on board.

If a standard group health plan is too expensive for your organization, you may want to consider a high deductible health plan (HDHP). An HDHP provides cost savings by lowering monthly premium expenses for employers and employees.

The downside is that HDHPs come with higher deductibles, which means your employees will need to pay more before the health insurance company starts helping with their bills. This could make things pricier for your team.

In this situation, you can set up a group coverage HRA (GCHRA), also known as an integrated HRA, to go with your HDHP. With a GCHRA, you can reimburse your employees tax-free for their out-of-pocket costs, like deductibles.

In some states, the Small Business Health Options Program (SHOP) marketplaces offer small group health insurance plans that can also you save money. Luckily, North Carolina has a SHOP marketplace through HealthCare.gov. Employers in North Carolina with fewer than 50 FTEs can access small business health insurance plans through a broker or a health insurance carrier. If you have fewer than 25 employees who earn less than $50,000 annually, you may qualify for the Small Business Health Care Tax Credit.

The following companies offer small group health plans in North Carolina in 2025, according to HealthCare.gov’s rate review website:

How to take advantage of individual health insurance with an HRA

If a group plan is feeling too pricey or you don't have enough staff to sign up for it, there’s a much better option for your small business.

With a stand-alone HRA, you can skip a traditional group health plan altogether. HRAs allow you to reimburse your employees for their more than 200 types of eligible medical expenses, including their individual health plan premiums.

Here are some examples of HRA-eligible expenses:

• Monthly premiums for health, vision, and dental plans
• Prescription drugs
• Over-the-counter medication
• Preventive care
• Emergency care
• Mental health services

Two HRAs allow you to reimburse employees for their plan premiums:

• The individual coverage HRA (ICHRA): This ICHRA offers the most flexibility for employers. With no annual limits on employer contributions, you can offer your workers as much as you'd like as an allowance. You can also differ allowances and eligibility with 11 employee classes, such as full-time and part-time workers. The ICHRA is also a great solution for ALEs who need to meet the employer mandate. Eligible employees need their own individual health insurance plans to participate in the ICHRA.
• The qualified small employer HRA (QSEHRA): The QSERHA is an excellent option for organizations that want to provide benefits for the first time or lower their premium costs. Unlike the ICHRA, the QSEHRA is only for small businesses with fewer than 50 FTEs. It also comes with annual contribution limits. It also doesn't have employee classes, but you can vary allowances based on an employee's age and family size. Eligible employees need health plans that provide MEC to participate.

An HRA is especially beneficial in places where the average individual health insurance premium cost is lower than small group premiums.

The chart below shows how much cheaper individual plans are in some North Carolina counties, according to Ideon:

Health stipends

You can also offer your employees a health stipend. It's extra cash you add to your employees' paychecks for their medical expenses. It's a flexible way to help them afford their out-of-pocket expenses, like premiums, copays, and any other healthcare services that an HRA or group plan doesn't cover.

However, there are some disadvantages to stipends:

• The IRS counts them as taxable income.
• Due to federal regulations, you can't ask for proof of insurance or receipts for items listed in IRS Publication 502.
• Stipends don't meet the employer mandate's requirements. ALEs who offer stipends instead of insurance or an ICHRA may face financial penalties.

That being said, stipends can still be a great way for small organizations to boost their health benefits. They can also help out businesses with employees who qualify for premium tax credits.

Ancillary and supplemental plans

Health insurance coverage is an important employee benefit, but it's just the starting point for supporting their overall well-being. You can offer them additional perks, called ancillary benefits, to go along with that health coverage.

Here are a few examples of ancillary and supplemental health benefits you can offer:

• Critical illness insurance: Critical illness insurance acts as a safety net for serious health issues, such as cancer, stroke, or kidney failure. These are things that regular health insurance plans may not fully cover. It gives your employees a one-time payment that they can use to take care of medical bills or to make up for lost pay for when they're are out of work.
• Vision insurance: Most traditional health plans don't cover vision. Adding vision coverage can help your employees out with costs for glasses and eye exams. Plus, you can also use an HRA to reimburse them for those vision expenses and any premiums for vision plans.
• Dental coverage: Just like vision coverage, medical plans usually don't offer adult dental care. If you throw in dental insurance as an extra perk, you can help your employees out with the costs of exams, fillings, and other dental expenses. You can also use an HRA to reimburse your team for their dental bills and dental plan premiums.
• Health savings account (HSA): An HSA is an employee-owned account that both you and your employees can contribute pre-tax dollars to. Your employees can then dip into their HSAs whenever they need to cover future medical bills.
• Flexible spending account (FSA): Just like an HSA, a healthcare FSA is there to help employees cover out-of-pocket costs when they need medical care. It includes most of what an HRA does but doesn't include health insurance premiums for reimbursement.

What plans are available on the individual market in North Carolina?

North Carolina residents use the federal health insurance marketplace, Healthcare.gov. There are nine health insurance companies offering plans for 2025. Availability for these plans differs across the state.

The Open Enrollment Period in North Carolina runs from November 1 to January 15 each year. People with marketplace plans may be eligible for federal premium tax credits, often referred to as premium subsidies or health insurance subsidies.

During the 2024 Open Enrollment, more than 952,000 people in North Carolina received premium subsidies for marketplace health plans. The IRS uses federal poverty guidelines to determine eligibility for premium tax credits.

The Inflation Reduction Act removed the upper-income limit through the end of 2025. Now, anyone can use these credits if their premiums cost more than 8.5% of their household income.

If someone misses the Open Enrollment Period, they can only sign up for a health plan if they experience a qualifying life event that triggers a special enrollment period (SEP). If not, they'll have to wait until the next Open Enrollment Period to enroll.

The table below shows the health insurance carriers that are offering plans on the individual market in 2025.