Navigator Guide FAQs of the Week: Health Coverage for Small Business Owners and Employees

By Kyle Maziarz

The Affordable Care Act’s Marketplaces are a critical source of health insurance for small business owners and their employees. This week, we’re spotlighting frequently asked questions (FAQs) from our Navigator Resource Guide on coverage for people who own or work for a small business.

I own my own business and have no employees, what are my options?

While you are not eligible to purchase small group health insurance or SHOP coverage in most states, you can purchase individual market coverage and may be able to qualify for financial assistance through the health insurance Marketplace for individuals. Note, however, that some states may allow you to purchase small group health insurance as a “sole proprietor.”

To find out if your state allows business owners with no employees to enroll in small group coverage, check with your state’s insurance department. (42 U.S.C. § 18024; 45 C.F.R. § 144.03 (definition of “small employer”).)

I work full time for a small business (fewer than 50 employees). Does my employer have to offer me health benefits?

No, small businesses are not required to offer health benefits to either full-time or part-time employees, or to their dependents. Small businesses are not subject to tax penalties when they don’t offer health benefits. If your small employer doesn’t offer health benefits, you (and your family) can apply for coverage in the Marketplace and you can apply for premium tax credits that may reduce the cost of coverage in the Marketplace. Subsidies are calculated based on the price of available plans and household income; lower income individuals are eligible for greater subsidy amounts. Some higher income individuals may not receive subsidies. (26 C.F.R. § 1.36B-2).

When can I enroll in my small employer plan?

Your employer can choose to begin offering coverage at any point during the year, but he or she is likely to require employees to enroll during an annual open enrollment period, unless you are a new employee.

Outside of your employer’s annual open enrollment period, there may be changes in your coverage or circumstances, known as “triggering events,” that allow you or your dependent to enroll in or change a plan during a special enrollment period. Special enrollment periods will be provided if you or a dependent (if your employer covers dependents): 

Lose minimum essential coverage (for example, if you or your dependent were previously covered by your spouse’s health plan, but are dropped from that coverage; or if the insurer providing the plan you were enrolled in through your employer discontinues the plan). 

Gain a dependent or become a dependent through marriage, birth, adoption or placement for adoption. 

Lose eligibility for coverage (for example, if you move or get a divorce or have a reduction in the number of hours making you ineligible for coverage). 

Lose eligibility for coverage under Medicaid or Children’s Health Insurance Program coverage. 

Become eligible for assistance with your employer-sponsored plan through Medicaid or Children’s Health Insurance Program coverage.

In most instances, you will have 60 days from the triggering event to select and enroll in a plan. Your coverage will generally become effective on the first day of the month following plan selection. However, exceptions are provided in certain circumstances. For example, coverage is effective on the date of birth, adoption, or placement for adoption.

When it’s time to renew your coverage, many employers will allow you to remain in the health plan you selected the previous year without taking any further action. If there are other plan options available to you, your employer will likely offer you an opportunity to switch plans during the annual open enrollment period. (45 C.F.R. § 147.104; 29 C.F.R. § 2590.701-6).

Open Enrollment for the individual Marketplace runs through January 15 in most states. Keep an eye on CHIRblog for more FAQs of the week throughout Open Enrollment, and check out the Navigator Resource Guide for hundreds of additional FAQs, state-specific enrollment information, and other helpful resources.