How Small Employers Can Offer Health Insurance Without Participation Requirements

If you’re a small business owner, offering health insurance to your team can feel daunting – especially when carriers start talking about participation and contribution requirements. But here’s a little-known provision under the Affordable Care Act (ACA) that could make it much easier.

Between October 15 and December 15, small employers in Utah have a special opportunity to secure group health insurance without meeting the usual participation or employer contribution requirements – as long as coverage starts on January 1.

At Altura Benefits, we make sure our clients and prospects don’t miss out on opportunities like this one. Here’s what you need to know.

Most insurance carriers have two key rules for small group health plans:

• Participation requirement: Usually, at least 75% of eligible employees must enroll.
• Contribution requirement: The employer must typically cover at least 50% of the employee-only premium.

These rules exist to prevent “adverse selection” – when only the highest-risk employees enroll, making the group more expensive to insure. But for many small businesses, these requirements can be a dealbreaker.

Maybe half your team already has coverage through a spouse, or you simply can’t afford to pay half the premium yet. Either way, the result is often the same: your group application gets denied.

From October 15 through December 15, insurance carriers must accept applications from small employers for plans effective January 1, regardless of participation or contribution levels.

This is a federal ACA rule that applies to small group markets, defined in Utah as employers with 50 or fewer full-time equivalent employees.

Outside this window, you’ll likely need to meet those standard participation and contribution requirements to qualify. But during this short annual period, those rules are waived – giving small businesses an open door into the group insurance market.

In addition, this provision benefits small employers who have employees who don’t qualify for tax credits or subsidies through the individual plan marketplace. The gross cost of a person plan is more than the gross cost of a small employer plan with richer benefits which means those employees would benefit from group plan even with no employer contribution.

This provision is more than a technicality – it’s a strategic opportunity.

Many small employers want to offer benefits but feel locked out due to cost or logistics. This 60-day window lets you:

• Offer coverage without high upfront costs. You choose how much to contribute, or even start at $0 employer contribution.
• Attract and retain talent. A benefits package helps you compete with larger employers.
• Build long-term stability. Once you’re in the group market, you’ll have more options and leverage at renewal time.

Imagine a 10-person company in Salt Lake City. Only 5 of the employees want coverage, and the owner can’t afford to pay 50% of the premiums. Normally, the group wouldn’t qualify for a plan.

But during this ACA window, the owner can apply between October 15 and December 15, set a January 1 effective date, and offer insurance to those 5 employees – no participation or contribution requirements needed.

It’s a great way to start offering benefits, even if your group isn’t quite “large enough” to meet typical standards.

Once you’ve enrolled through this provision, consider these steps to strengthen your benefits program for future renewals:

1. Communicate early and often. Make sure employees understand the value of the coverage you’re offering.
2. Explore tax advantages. Employer contributions are typically tax-deductible, and employee premiums can be pre-tax through a Section 125 plan.
3. Revisit participation next year. As employees see the value, participation often increases organically.
4. Compare plan types. Look at ACA small group plans versus level-funded options in future years – each has unique advantages.

This provision is just one example of how the Affordable Care Act benefits small employers. Other protections include:

• Guaranteed issue: You can’t be denied coverage based on employee health conditions.
• Community rating: Premiums are based on age, geography, and tobacco use – not health history.
• Essential health benefits: All ACA small group plans must cover key services like maternity care, prescriptions, and preventive services.

These protections ensure fairness and predictability for small businesses entering the group health market.

Navigating the ACA rules can be confusing – but that’s where we come in. At Altura Benefits, we:

• Help you compare carriers and plan options side-by-side.
• Advise on contribution strategies that balance cost and employee value.
• Provide ongoing support after enrollment to keep your plan running smoothly.

We see this ACA window as a game-changer for small employers. It’s a way for cost-conscious businesses to finally offer health insurance – without the usual red tape or financial strain.

If your business has fewer than 50 employees and you’ve been holding off on benefits because of participation or cost hurdles, now is the time to act. Our team can walk you through your options, compare carriers and plans, and make sure your paperwork is submitted before the December 15 deadline.

Altura Benefits helps small businesses across Utah find affordable, sustainable health insurance solutions. Whether you’re looking to take advantage of this ACA provision or explore other creative plan designs, our experts can guide you every step of the way.

Call us at (801)-263-2900 or fill out this convenient contact form to get started. Let’s make sure your team – and your business – don’t miss this opportunity!