Insurance Types Required for Business Owners with Employees


Insurance Types Required for Business Owners with EmployeesInsurance is a fact of life for all business owners. While all businesses benefit from general types of business insurance like liability insurance, there are certain types of insurance specifically for employers. So, if you’re an entrepreneur thinking of turning your one-man-show into a larger business, or if you’re starting a new business with employees, here is some information about the types of insurance you must provide.

If you have employees, you are required by law to pay for certain types of insurance, which can include unemployment insurance and workers’ compensation insurance. In order to determine if you need to pay unemployment insurance tax, head to your state’s website.

Workers’ compensation insurance can be purchased either through a state Workers’ Compensation Insurance program or from a commercial insurance provider. It can also be carried on a self-insured basis. More information can be found on your state’s Workers’ Compensation Office website.

Depending on the location of your business, you may also be required to pay for disability insurance.

“Some states require employers to provide partial wage replacement insurance coverage to their eligible employees for non-work related sickness or injury,” according to the United States Small Business Administration (SBA).

If your employees are in any of the following states, you must purchase disability insurance from the applicable department of that state:

  • California: Employment Development Department
  • Hawaii: Unemployment Insurance Division
  • New Jersey: Department of Labor and Workforce Development
  • New York: New York State Workers’ Compensation Board
  • Puerto Rico: Departamento del Trabajo y Recursos Humanos/Department of Labor and Human Resources
  • Rhode Island: Rhode Island Department of Labor and Training

The SBA offers resources for understanding your insurance requirements and other insurance information, which can be found at http://www.sba.gov/content/insurance-resources.

Many small business owners also have questions about the impact of the Affordable Care Act. Fortunately, healthcare.gov has all of the information you need to determine exactly what you’re required to provide and how to provide it.

“Businesses with 50 or fewer employees may get employee health coverage in the SHOP Marketplace,” describes healthcare.gov. “Employers of this size aren’t required to offer health coverage.”

Although the rollout of the Affordable Care Act can be confusing, employers with fewer than 50 employees should consider offering coverage through it in order to take advantage of the benefits it provides. One benefit is that you cannot be charged a higher premium by your insurance plan if you employ women (some plans used to charge more in order to compensate for maternity costs) or if you have employees that have high medical costs.

“Businesses with 50 or fewer full-time equivalent (FTE) employees can use the Small Business Health Options Program (SHOP) to offer coverage to their employees,” states healthcare.gov. “This applies to non-profit organizations as well. You control the coverage you offer and how much you pay toward premium costs.”

 

 

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