Most insurers and health plans require employers to cover at least half of the premium cost for covered employees. This requirement is meant to encourage more employees to join the plan, and prevent what’s known as “adverse selection” where only those prone to sickness are motivated to sign up, creating a much higher-risk group for the insurer.
When considering what portion of the premium to pay, employers should be aware that the Affordable Care Act offers small businesses tax credits to help offset the cost of insurance. The employer must pay at least 50% of the premium to qualify for the credit.
To see whether you qualify for the tax credit and to find out how it is calculated, visit “Small Business Tax Credit” in the tool box.
Employers have no obligation to pay for premiums for dependents. Employers may contribute towards premiums for dependents, but are free to require employees to pay for the full premium cost for covered dependents. Talk with a broker or agent to find out about all your options.