One of Sarah's goals in 2025 for her daycare business is to provide her team with an option for health insurance coverage. She knows that many of her teachers are single and don't have access to a spouse's plan, which leaves them shopping the health insurance marketplace if they try to get individual coverage on their own.
Sarah loves running her business in Dallas and knows how important her teachers and staff are to keeping things running smoothly. She also knows that having a qualified health plan will allow her to keep her team together longer. Offering them health insurance is obviously important, but she needs to keep costs low.
As she looks into different employer-sponsored plans available to a business her size, she learns that insurance companies use Full-Time Equivalents (FTEs) in determining premium costs and the health benefits they will provide. More importantly, she realizes that insurance companies look at FTEs to decide what health insurance plans a small business can qualify for to offer their employees.
Sarah wants to make sure she gets the best deal for her daycare and employees, so she wants to make sure she understands this calculation and process.
At first, Sarah is not sure if her business even qualifies for group health insurance. She knows that larger businesses have to offer health coverage, but her daycare has fewer than 50 employees.
After doing some research, she learns that even though she is not required to provide insurance, she can offer both non-traditional or traditional group health insurance. Small businesses find that employer sponsored health insurance often gets better coverage when compared to individual health plans. And since employers have to cover at least 50% of the cost of health coverage, the employees typically see savings in their monthly costs as well.
Sarah realizes that figuring out her daycare’s FTE count will help her find the best plan as different health insurers will offer different plans based on her count of FTEs. Before she can move forward, she needs to understand how her part-time and seasonal employees fit into the calculation.
Sarah has a mix of part-time and full-time employees. She also hires extra help in the summer when more parents need childcare. She wonders if those extra workers will be considered eligible employees and count toward her FTE total.
She learns that part-time employees do count, but not in the same way as full-time employees. To calculate FTEs, she needs to add up all the hours her part-time employees worked in a month and divide by 120. That number tells her how many full-time equivalent employees she has.
The seasonal workers she hires in the summer do not count unless they work more than 120 days per year. Since they are only at the daycare for a few months, they will not impact her FTE calculation.
Now that she has a better idea of her FTE total, she starts thinking about how it will affect the cost of health insurance.
Sarah is happy to know that she qualifies to get a group medical plan, and that she does have health care coverage options even though she does not have 50 or more full-time employees.
As she begins to talk with the broker at Insurance For Texans, she also learns that those FTEs play a big role in how much her average cost will be for the plan. The more employees who sign up for coverage, the lower the monthly cost can be for everyone.
Insurance companies spread the risk across as many people and families as possible. So the more employees who enroll, the lower the health insurance premiums will be. If only a few employees enroll, the monthly premiums for the plan can become more expensive or have fewer options for essential coverage.
Sarah realizes that getting more of her teachers and staff to sign up will help keep the plan affordable. She starts thinking about ways to encourage them to enroll, but before she does that, she wants to check if her daycare qualifies for any premium tax credits that could help with the cost.
Sarah learns that small businesses with fewer than 25 FTEs may be able to get a business tax credit to help with the cost of health insurance. Since her daycare meets that requirement, she is interested in learning more.
The Small Business Health Care Tax Credit can cover up to 50% of the premiums she pays for her employees. To qualify, employer contribution must be at least 50% of the cost of employee premiums and choose a Small Business Health Options Program (SHOP) plan. There are also some payroll requirements as well.
This tax credit makes offering health insurance options much more affordable. With this new information, Sarah feels more confident about moving forward with group health insurance benefits for her daycare. Now, she was ready to choose the best plan and make sure she is getting the best rates.
Sarah understands that navigating group health insurance on her own is not easy. The health insurance companies seem to make this as complicated as possible. She wants to make sure she gets the right coverage to employees while keeping costs as low as possible.
She decides to work with a Texas health insurance specialist who understands small business needs. A specialist can help her calculate FTEs, compare different plans, and find ways to save money through tax credits and lower premiums. Insurance For Texans is a local, Texas agency that has worked to find business health plans for many owners across this state. A conversation with the right person can make the process easier and help you find the best coverage for your employees.
If you are a small business owner in Texas and need help finding the right business health plan, click the button below to connect with an expert.