According to the Small Business Administration, more than 4.7 million Texans, or 45.

6 percent
of all workers in the state, are employed by small firms. As firms compete to bring on the most
productive and innovative employees, small group health insurance plans are a great way to
make your business a desirable place for quality employees to work at. By understanding the
unique nature of small business health insurance in Texas, you may have an easier time starting a
business, expanding an existing firm, or simply succeeding in the small business market.

How does small business health insurance in Texas

work?
As with small group health insurance in most states, Texas regulates employers’ options and
responsibilities for providing coverage to those who work for them. Thus, to understand small
business health insurance in Texas, you have to be familiar with the state’s policies on:

 Coverage obligations– Like most states, Texas does not require businesses that have
fewer than 50 employees to offer small group health insurance. While many of these
small businesses do provide health insurance in Texas, they don’t have to pay a penalty if
they choose not to. However, if such employers offer small group health insurance to
some people, they have to extend the offer to all of their full-time employees.
 Full-time employment– The Texas Department of Insurance defines “full-time
employee” as anyone who works 30 hours a week or more for the same organization. But
because many Texans don’t work the same number of hours from week to week, the
Department measures how many hours each employee works per month and divides that
by four. Those who work more than 120 hours are full-time employees, regardless of
whether they divide that time evenly from week to week.
 Premium provisions– Small businesses that offer health benefits in Texas are not required
by law to help cover their employees’ premiums. But many insurance companies expect
them to do so when they sign up for small group health insurance plans. Thus, in practice,
to offer small business health insurance in Texas, a firm must cover 50 percent or more of
the premiums.

As in most states, the more employees a business has, the more likely it is to offer health
insurance in Texas. Among firms with fewer than 10 employees, only 28 percent offer small
group health insurance according to the Small Business Administration; this increases to 53
percent among firms with 10 to 24 workers, 68 percent among those with 25 to 99 workers, and
90 percent among those with 100 to 499 workers. Thus the larger your operation, the more likely
it is that you’ll need to offer small business health insurance in Texas.

What are the benefits of providing group health

insurance in Texas?
In addition to the general advantages of small group health insurance, there are some unique
benefits to offering coverage to employees in Texas specifically. These include:
  Affordable Premiums– Due to several factors such as larger pools, and less risk, group
health insurance plans generally cost less per individual than individual plans. This
means your employees are gaining access to more affordable health insurance.
 State Incentives– Texas offers a number of incentives to help pay for small group health
insurance. In particular, it caps annual price increases on small group health insurance
plans at 15 percent. It also lets small businesses work together in negotiating lower prices
for insurance, and it bans insurers from ending coverage without legitimate reason.
 Prime Location– Dallas is one of the regional headquarters for the ACA coalitions,
or groups of public authorities and community partners that help extend quality
healthcare to as many people as possible. This makes the city and the rest of Texas a
prime location for information on and access to health coverage.

eHealth offers comprehensive small group health insurance in Texas and across the United
States. For more information on affordable, effective coverage, visit our website today.

This article is for general information and may not be updated after publication. Consult your
own tax, accounting, or legal advisor instead of relying on this article as tax, accounting, or legal
advice.

Does your small business qualify for health tax

credit?
To qualify for the full credit, you must meet the following criteria:
Number of full-time workers the company employs is within

25
Average annual wage per worker must be less than

$50,000
Minimum employer contribution toward employee coverage is

50%
If you are a small business owner with 25 full-time employees or less, and pay an
average salary less than or equal to $50,000 a year, you might be eligible for a tax
credit.* This tax credit was created under the Patient Protection and Affordable Care
 Act (PPACA) in order to give small businesses and tax-exempt organizations a break
on the cost of group health insurance for their employees.
The federal tax credit will reimburse qualifying small businesses for up to 50% of the
premiums they pay towards employee medical, vision and dental insurance. Tax-
exempt organizations may qualify for a tax credit of up to 35% of premium expenses.
*In some states, the tax credit only applies to Qualifying Health Plans (QHPs) bought through
government exchanges. Other restrictions may apply.
Small businesses with fewer than 10 full-time employees that pay average annual
wages of $25,000 or less may qualify for the full credit. The amount of the credit is
reduced for companies with more full-time workers and higher wages, until it is
phased out entirely for those with 25 or more full-time workers and average annual
wages over $50,000.
Because eligibility rules are based in part on the number of full-time employees, not
the total number of all employees, businesses that use part-time help may qualify even
if they employ more than 25 individuals.
The purpose of this guide is to provide a
general overview of Texas small business
health insurance. The guide reviews small
business health insurance options for Texas
small businesses.
Building a successful business is hard work. Finding affordable small
business health insurance doesn’t have to be. All small businesses
face special challenges when it comes to finding and getting health
insurance coverage. Luckily, recent health care reform legislation
provides small businesses with special opportunities to secure
affordable health insurance.
Texas Core Small Business Health Insurance
Options
When evaluating your small business health insurance options in
Texas, you should immediately compare the costs and benefits of the
following three options:
1. Offering Traditional Small Business Health Insurance Coverage,
2. Offering a Defined Contribution Health Plan that Reimburses
Employees for Individual Health Insurance Coverage, and
3. Offering Nothing
Texas Small Business Health Insurance
Overview
There are two primary categories of health insurance for small
businesses to choose from:
1. Individual health insurance, 
2. Group health insurance. 
1) Individual Health Insurance
Individual health insurance plans are health insurance plans
purchased by individuals to cover themselves or their families. Anyone
can apply for individual health insurance. Small business owners who
can’t offer group coverage due minimum contribution (or minimum
participation) requirements typically purchase individual and family
plans for themselves and their families. In 2014, insurance companies
will no longer be able to decline individuals for individual health
insurance based on a pre-existing medical condition. Also, starting in
2014, there are new special tax incentives available to businesses and
employees when employees purchase individual health insurance. In
some cases, self-employed persons who purchase their own health
insurance may be able to deduct the cost of their monthly premiums.
When small businesses decide on the individual health insurance
route, they often create a "Pure" Defined Contribution Health
Plan to reimburse employees tax-free for individual premiums.
2) Group Health Insurance
Group health insurance plans are a form of employer-sponsored
health coverage. Costs are typically shared between the employer and
the employee, and coverage may also be extended to dependents. In
 certain states, self-employed persons without other employees may
qualify for group health insurance plans.
Four Types of Texas Small Business Health
Insurance Plans
Whether you’re looking at individual health insurance or group health
insurance, there are several different types of health plans available.
The four you should absolutely know are:
1. PPO Health Insurance Plans,
2. HMO Health Insurance Plans,
3. HSA-Qualified Health Insurance Plans, and
4. Indemnity Health Insurance Plans.
The plan type that is best for you and your employees depends on
what you and your employees want, and how much you are willing to
spend. Here’s a brief review of the four popular types of health
insurance plans:
1) PPO Health Insurance Plans
PPO or “Preferred Provider Organization” plans are the most
common. Employees covered under a PPO plan need to get their
medical care from doctors or hospitals on the insurance company’s list
of preferred providers in order for claims to be paid at the highest
level.
2) HMO Health Insurance Plans
HMO stands for “Health Maintenance Organization.” HMO plans offer
a wide range of health care services through a network of providers
that contract exclusively with the HMO, or who agree to provide
services to members. Employees participating in HMO plans will
typically need to select a primary care physician (“PCP”) to provide
most of their health care and refer them on to HMO specialists as
needed.
 3) HSA-Qualified Health Insurance Plans
HSA-qualified plans are typically PPO plans designed specifically for
use with Health Savings Accounts (HSAs). An HSA is a special bank
account that allows participants to save money – pre-tax – to be used
specifically for medical expenses in the future. Section 105 Healthcare
Reimbursement Plans (HRPs) are often used in place of HSAs due to
their advantages for employers.
4) Indemnity Health Insurance Plans
Indemnity plans allow members to direct their own health care and
generally visit any doctor or hospital. The insurance company then
pays a set portion of the total charges. Employees may be required to
pay for some services up front and then apply to the insurance
company for reimbursement. 
Texas Small Business Resources*
Texas Health Insurance Coverage:
 Group Plans: There is a maximum 6-month look-back/12-month
exclusionary period for pre-existing conditions on enrollees that do not
have prior coverage. Benefits will vary depending on the chosen
plan. Pre-existing health conditions covered. 
 Individual Plans: Assorted plans depending on medical needs.
There is a maximum look-back period of 60 months and a maximum
exclusion period of 24 months for pre-existing conditions on enrollees
that do not have prior coverage. Elimination riders are permitted.
Limits on pre-existing health conditions may apply. 
 COBRA: Coverage available for 18-36 months depending on
qualifying events. Benefits are what you had with your previous
employer. Pre-existing health conditions covered.
 HIPAA: Benefits are based on program selected. There is no
expiration of coverage. Pre-existing health conditions covered.
 HIPAA: Premium assistance that pays employer-sponsored
health insurance or Cobra premium available. Pre existing health
conditions covered.
 Texas Health Insurance Eligibility:
 Group Plans: Guaranteed coverage for companies with 2-50
employees. Eligible employees must work at least 30 hours a
week. Owner can count as an employee. Owner name on business
license must draw wages from the company. 
 Individual Plans: Eligibility is subject to medical underwriting. If
you are denied coverage for a medical condition, you may be eligible
for AHIP, or PCIP. 
 COBRA: Guaranteed coverage available for employees who
work for businesses with 20 or more employees. Employees have 60
days from date of termination to sign-up. 
 HIPAA: Must have had 18 months of continuous coverage and
completely exhausted Cobra or state continuation coverage. Must not
have lost coverage due to fraud or non-payment of premiums. You
have 63 days to enroll. 
 HIPAA: Must qualify for Medicaid and have access to Employer-
Sponsored Insurance or Cobra.
Texas Health Insurance Monthly Cost:
 Group Plans: Costs depend on employer contribution and
the + 20% of the Insurance company’s Index rate. 
 Individual Plans: Costs for Individual coverage vary. There are
no rate caps. 
 COBRA: Costs vary between 102% to 150% of group health
rates. 
 HIPAA: Premiums will depend on plan chosen. 
 HIPAA: Reimburses the full employer-sponsored insurance
premium amount by check monthly. Pays the insurance company
directly for people on COBRA or eligible small businesses. 
*Source: www.coverageforall.org
Texas: Average “Single” Premium per Enrolled
Employee for Employer-Based Health Insurance, 2011*
  Texas % Texas $ US % US $
Employee 19% $999 21% $1,090
Contribution
Employer 81% $4,199 79% $4,132
Contribution
Total 100% $5,198 100% $5,222
 
Texas: Average “Family” Premium per Enrolled
Employee for Employer-Based Health Insurance, 2011*
  Texas % Texas $ US % US $
Employee 29% $4,318 26% $3,962
Contribution
Employer 71% $10,585 74% $11,060
Contribution
Total 100% $14,903 100% $15,022
 
Texas: Average “Employee-Plus-One” Premium per Enrolled
Employee for Employer-Based Health Insurance, 2011*
  Texas % Texas $ US % US $
 Employee 29% $3,009 27% $2,736
Contribution
Employer 71% $7,210 73% $7,593
Contribution
Total 100% $10,219 100% $10,329
 
Texas: Average Per Person Monthly Premiums in the Individual
Market, 2010*
  Texas $ US $
State Average  NA $215
Premium
*Source: statehealthfacts.org
Small Business Health Insurance Reform
Are you ready for health care reform ("ACA") in 2014?
Today, employers are more stressed than ever. Here’s why:
1. The business environment is uncertain,
2. Employer-sponsored health insurance costs increase annually,
and
3. New fees and penalties take effect next year, and most
employers don’t fully understand how this will affect their financials.
It is time for employers to examine the specifics of healthcare reform,
and start thinking strategically vs. emotionally. Change is hard.
However, employers that educate themselves and plan ahead can
avoid severe financial impacts.
The more change and disruption your business can embrace, the
more cost savings (for both the company and your employees) you
will be able to realize over the long term. In order to embrace this
change, you must be familiar with the key aspects of ACA. For many
small businesses, the solution to healthcare reform is simple: Offer a
“Business Expense Account” for Healthcare. A new vehicle, called a
Healthcare Reimbursement Plan (HRP), allows employers to get out
of the health insurance business, and simply give select employees
monthly allowances to spend on their own health insurance policy in a
state health insurance exchange.
Listed below are key ACA components to consider when choosing
small business health insurance. 
Individual Health Insurance Tax Subsidies
Beginning 2014, individuals will have access to tax subsidies to buy
private health insurance through the public exchange. These
subsidies will be for those who enroll in a silver plan through the
exchange. The subsidy caps the cost of individual health insurance at
2% - 9.5% of their household income if their household income is less
than 400% above the federal poverty line. This equates to roughly
$90,000 per year for a family of four.
Click here for more information on the premium subsidies.
Individual Health Insurance Tax Penalties
The Individual Mandate requires most individuals to purchase health
insurance, or else pay a penalty on their tax return each year. The
intention of the individual penalty is to reduce the "Free Riding" effect
in the health insurance market (a free rider is someone who is healthy
and does not purchase health insurance until they need it.
Click here for more information on individual tax penalties.
Small Business Health Insurance Tax Credits    
Small businesses with up to 25 full-time equivalent employees may
qualify for a tax credit for offering employee health benefits. The credit
is broken in to two phases. Phase 1 (2010-2013) includes a tax credit
worth up to 35% of a small business’s health insurance costs.  Phase
 2 (2014 and beyond) includes a tax credit up to 50% of a small
business’s health insurance costs.
Click here for more information the tax credits.
Small Business Health Insurance Tax Penalties
Starting January 1, 2015, Employers with 50 or more full-time
equivalents who do not offer minimum essential coverage can face
monthly penalties if at least one employee uses a premium tax credit
to obtain health insurance through the state health exchange. If you
do not have more than 50 employees, you are not subject to these
penalties.
Click here for more information on the business tax penalty.
The Future of Small Business Health Insurance
- Defined Contribution Plans
Defined Contribution Plans allow employers to offer health benefits
without offering a traditional group health insurance plan. Instead of
paying costs for a specific group health plan, employers allocate tax-
deductible monthly allowances for their employees to spend on private
health insurance and other medical expenses tax-free.
Features of defined contribution plans include the following:
 Employee Choice – employees choose a health insurance plan
that best fits their needs.
 Fixed Cost – employers control health care costs by allocating
fixed monthly allowances for their employees.
 Savings – employers using Defined Contribution Plans typically
cost less than group health plans which results in saving for both the
employer and employee.
Next Steps – Evaluate Your 3 Core Options
Immediately compare the costs and benefits of the following three
options:
1. Offering Traditional Small Business Health Insurance Coverage,
2. Offering a Defined Contribution Health Plan that Reimburses
Employees for Individual Health Insurance Coverage, and
3. Offering Nothing.