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I'm a Texas employer with one employee (myself the owner). I

I'm a Texas employer with...
I'm a Texas employer with one employee (myself the owner). I plan to hire another employee. I currently receive an individual health insurance for myself from my company.If I wish to offer health insurance to this new, can I offer individual health insurance or do I have to purchase group health insurance?
Thanks
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8/16/2017
John
John, Employment Lawyer
Category: Employment Law
Satisfied Customers: 5,833
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There's no law mandating the employer offer insurance for this small of a group. Therefore the employer can simply reimburse another policy or there is an option under the new law where employer can live a standalone HSA and fund that absent providing a policy to the employee… The employee then goes out and buys insurance on his or her own and uses the HSA money for the premiums and out-of-pocket costs.

I believe this answers your question. However, if you need clarification or have follow-up questions regarding this matter, I will be happy to continue our conversation - simply reply to this answer. If you are otherwise satisfied with my response, please leave a positive rating as it is the only way I am able to get credit for my answers (even though the website already charged you, it does not credit me with the answer unless and until you indicate you are satisfied with the answer). If you are on a mobile device, you may need to scroll to the right. Thank you, ***** ***** wish you all the best with this matter.

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Customer reply replied 4 months ago
I'm afraid but that does not answer my question.My question was - I wish to offer health insurance to this new employee, so can I offer individual health insurance? Or do I have to offer group insurance?Let me try to explain the reasoning behind this. I currently take health insurance from my company (individual health plan). And I want to continue taking my health insurance from the company. Hence (I believe) that I will have to offer health insurance to this new employee.

Yes if your company has you on a plan, you must put every employee that qualifies under the terms (generally if they work more than 32 hours per week) of the plan on to the plan to keep the plan qualified under ERISA and the internal revenue code. In other words in order for it to continue to be tax free benefit to yourself, all qualified employees must be offered the plan coverage.

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Customer reply replied 4 months ago
But it is an Individual plan, and NOT a Group plan. I heard from my insurance agent that it's against the law for a company to offer an Individual health plan to its employees. He said the employer MUST purchase a Group plan. Is that correct?

Let's break this down into pieces.

1) Is it against the law for an employer to buy an individual plan for an employee - No, there's no law that says an employer cannot do this.

2) If an employer does buy an individual plan for an employee is it tax qualified (i.e., is it exempt from income tax to the employee)? No it is not tax qualified. The value of the plan should be taxable income to the employee.

3) If you have one employee getting individual plan, does every other employee have to get that? - No. Only when a group plan (which is tax qualified because it is offered to all employees at a certain threshhold - usually 32 hours per week employment) is in place does the plan have to be offered to all employees within the coverage status.

4) When does a group policy have to be offered? currently only employers with 50 or more full time employees must offer group health insurance.

So to answer the question ultimatley - must the employer offer a group plan? No. However, if you are not on a group plan, the value of the plan purchased for you should be taxable income to you...and if it's not being reported as the same, that's a violation of ERISA and the tax code. Hope that answers your question.

John
John, Employment Lawyer
Category: Employment Law
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Customer reply replied 4 months ago
Thanks. Yes, that does answer the question very nicely. Appreciate it.
Customer reply replied 4 months ago
Hi John,I have a follow-on question. You mentioned that the employer can fund a standalone HSA plan for employees. I currently am the owner of the company and fund my personal HSA plan (that works in conjunction with an HDHP health plan. Details at https://www.selectaccount.com/products/hsa/ ). I put aside dollars each year and get a deduction in my 1040.So if my company offers a employer HSA plan, can I fund my personal HSA in addition to this employer HSA plan?

Yes, but you gain nothing that way just to be clear. There's still a max amount you can have in all HSAs which is

$3,350 for an individual and $6,650 for a family ...so you can just do that in your current account or get two accounts and split it up...but you don't gain a tax advantage that way.

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John
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