The Texas Small Business Health Insurance Guide

Small business health insurance in Texas doesn’t need to be daunting. With the flexibility of options available to employers and employees alike, it’s easy to incorporate coverage into your risk management plan.

In Texas, small businesses employ over 4.9 million Texans — 45.1% of the workforce. Many of those business industries are growing rapidly. Small business health insurance remains a decisive factor in attracting, retaining, and nurturing Texan talent as actions have been taken to broader its accessibility in recent years.

To understand the wide scope of health insurance for small businesses, check out our full guide here.

Keep reading about how health insurance for small business owners specifically works in Texas.

What Is Health Insurance?

Health insurance refers to insurance policies that cover medical expenses. Small business health insurance is group insurance designed to meet the needs of a smaller organization that may not have a full HR department to organize health benefits. In Texas, small businesses utilize the government’s Small Business Health Options Program (SHOP) and purchase insurance through the federal health insurance website.

Health insurance protects people if they need medical care due to an illness or an injury. Preventative care such as routine check-ups and annual tests is usually covered, too. The amount of money a person might pay for a routine visit, surgery, or medical emergency will vary depending on the health plan.

In a perfect world, everyone would have health insurance. Illnesses and accidents are unavoidable as we journey through life. Even healthy people need regular visits with a doctor or coverage in case of an emergency.

According to Statista, Texas had the highest rate of uninsured Americans per state population in 2021. On a more positive note, that number is 16.1% as opposed to 19.1% in 2017, indicating that coverage for Texans is steadily expanding.

Key Health Insurance Terms

As you’re brushing up on health insurance, knowing these important terms will simplify the process:

• Deductibles: This is what you pay before your health insurance covers you. (Lower premiums per month might result in a higher deductible.)
• Copayment (Copay): This is the fixed amount you pay for services. For example, every office visit is $20 or every prescription is $10.
• Coinsurance: This is the percentage of the cost you will pay for services after you’ve reached your deductible. (For example, with a 20/80 coinsurance, you will pay 20% of the cost for services and your insurance will cover 80%.)
• Out-Of-Pocket Limit: The maximum amount of money you are expected to pay for services in a calendar year. After your limit, the insurance covers 100% of the services.
• Health Care Provider Network: This is a list of doctors and other providers that will accept your insurance.
• In-Network: A specific list of providers/specialists your insurance will accept.
• Out-Of-Network: Providers and specialists that your insurance may not pay for or will cover a smaller portion of the expenses.

Am I Legally Required To Provide Health Insurance In Texas?

If you are a small business owner with over 50 employees, you are legally required to offer insurance to your employees. If you are a small business owner with between two and 50 employees, offering health insurance is optional.

Even though you may not be legally obligated to offer health insurance, offering health insurance can offer your business several benefits. In addition to your employees feeling happy, healthy, and comfortable working for you, you are eligible for tax credits and deductions if you pay at least 50% of employee premiums.

According to the Texas Government, “Texas insurance law defines a small employer as a business with two to 50 employees, regardless of how many hours the employees work.” Additionally, Texas law counts 120 hours done by part-time employees in a month as a full-time equivalent employee. Texas laws don’t require you to pay your employee’s premiums, although many insurance companies will require you to pay at least 50% of employee premiums.

Also, according to Texas law, if you offer health insurance to any employees, you must offer it to all employees who work 30 hours or more a week and all employees’ dependents. You can make employees wait up to 90 days before they are eligible for health insurance benefits, and if employees don’t sign-up for insurance within a 31-day window, you can deny them insurance benefits until open enrollment.

Small businesses beware: if fewer than 75% of your employees participate in your health insurance program, most insurance companies will make you wait until open enrollment to begin your plan. Employees with individual health plans don’t count toward that percentage. Businesses with over 75% participation can enroll anytime.

Federal law requires small-employer plans to cover 10 types of essential health benefits. 

These benefits include:

• Outpatient care
• Emergency services
• Hospitalization and surgery
• Maternity and newborn care
• Mental health and substance use disorder services
• Prescription drugs
• Rehabilitative services and devices
• Laboratory services
• Preventive and wellness services
• Pediatric services

Individual VS Group Health Insurance

An individual health insurance plan is a health insurance plan that an individual pays for and designs to fit their needs. One option for small businesses is to give employees a monthly sum and have the employee take control of where to purchase insurance. With the addition of the individual health marketplace, more people can invest in health insurance without the need to go through a group insurance plan. A group health insurance plan is where a group (namely, a company or business) buys insurance for members of that group at a reduced rate.

Health insurance is expensive and fluctuates with rising healthcare costs. For group health, premiums continue to rise, and employers require their employees to pay more for the financial burden.

Which Type Is A Good Fit For Your Business?

Group plans are great for businesses with a growing number of employees, especially those who might have families. The more people to cover, the more cost-effective a group plan will be. Also, you can negotiate rates if you have a young and healthy staff.

Small businesses looking for ways to save on health care may want to promote individual plans. With a defined contribution plan, tax-free money is given to an employee each month to spend on health insurance. More individualized care means that health money could be spent more efficiently.

Types Of Health Insurance Plans

Texans can access the federally-run marketplace at HealthCare.gov to see a list of insurance plans available in their state. As you start to shop, you will find that there are several specific health insurance plans for you to choose from. The main differences come down to:

• Size of the network
• The cost for you and for your employees
• The ability to see specialists without referrals
• The size of the in-network
• Cost coverage for out-of-network services

Here is an overview of each major health insurance plan and what they mean for your small business.

Health Maintenance Organization (HMO)

An HMO is a type of health insurance plan with a network of doctors accepting your insurance. Your employees only have access to providers employed through the HMO and out-of-network care is often not covered (except in an emergency). The HMO provides a lower cost option to employees but lowers the choices of providers/hospitals where they can be treated.

The HMO plan is ideal for:

• People who want to know exactly what each visit will cost
• Young and healthy people
• People with known health procedures and a significant number of appointments (for example, pregnancy)
• People who don’t need many specialists
• Focused on prevention and wellness

With an HMO, the insured must retain a Primary Care Physician and go through that doctor for referrals to specialists. That means this plan is not ideal for people who need care across a wider geographical area, such as people who travel. However, out-of-pocket expenses tend to be lower and more predictable.

Preferred Provider Organization (PPO)

A PPO is a type of health insurance plan where a network of doctors agrees to accept a set payment. Unlike the HMO, you aren’t limited to in-network provers, so you have access to any health provider you choose — out-of-network providers just cost more. You also do not need a referral for specialists. Since A PPO has the most choices, the premium costs are generally higher.

The PPO plan is ideal for:

• People who might spend more for more specific care
• People who want a choice on which medical professionals to visit
• People who visit specialists and want the option to choose their own

The PPO plan is more choices for more money and with greater flexibility.

To learn about the other types of health insurance available, read our Ultimate Guide To Small Business Health Insurance.

How Do I Find Small Business Health Insurance In Texas?

Now that you understand your insurance obligations as a Texas small business owner and know how much health insurance will cost, where do you find health insurance?

Texas Insurance Providers and Resources

Go to healthcare.gov and search for available plans in your area to see what’s available. According to healthinsurance.org, the participating insurance companies in Texas in 2023 include:

• Ascension Personalized Care
• Imperial Insurance Companies
• Cigna
• Aetna CVS Health
• Celtic/Ambetter
• Imperial Insurance Companies
• CHRISTUS
• SHA/FirstCare
• Moda Health Plan
• Molina
• Sendero
• Community Health Choice
• Scott & White Health Plan
• UnitedHealthcare of Texas
• Oscar

Note: Participants change yearly. Visit healthcare.gov for the most up-to-date information and providers.

When Can I Enroll?

The open enrollment period for coverage in 2023 was recently closed.

On November 1, open enrollment for individuals or companies with fewer than 75% of their employees will be available again. Open enrollment in Texas goes from November 1 to December 15 for businesses and up to January 15 for individuals.

How Do I Choose The Right Insurance Plan?

Choosing the right plan for your business comes down to asking yourself the following questions: What kind of medical care do my employees need? How much money am I willing to put into health insurance? And, is choice or cost more important to my employees? 

In order to determine which policy will work best, decide how many of the upfront costs you are willing to contribute to your employee premiums and what kind of insurance options would be the best fit. Here are the biggest factors in health insurance costs:

• Medical history
• Prescription drug coverage
• How many visits are needed to a doctor per year
• What specialists are provided, if any
• Specific employee medical needs and history
• Any plans for pregnancies, etc.

Think about your employees, their ages, and their needs. With an outline of what best suits your employees, you’ll be able to sit down with an insurance agent or broker and determine how to get the best policies for the cost.

How Much Does Health Insurance Cost In Texas?

The cost of business insurance is always at the forefront of decisions as a business owner. The federal marketplace for small employers has categories of Bronze, Silver, and Gold plans. These plans are based on your employee’s age.

Here are some sample prices for ages, taken from the SHOP Marketplace data.

Prices are listed in order of bronze, silver, and gold plans, and rounded to the nearest dollar. This is the cost per employee, per month.

• Employees younger than 21: $102, $142, $164
• Employees between 21 and 30: $160, $223, $259
• Employees in their 30s: $182, $253, $293
• Employees in their 40s: $205, $285, $331
• Employees in their 50s: $286, $399, $331
• Employees 60 and older: $434, $606, $703

Getting Started

Choosing to insure the health of your employees is the right decision. Follow the steps to get insurance through the federal marketplace once you’re ready to buy a health insurance policy. Acquaint yourself with the terms of each insurance package and help employees understand their benefits, too.

It’s easier than ever to find a way to protect your health and the health of your employees with health insurance, so don’t be afraid to take the leap.

Even if you have just one employee and you want to insure them, we have a guide for health insurance for one employee. To learn more, check out our additional resources to help you understand health insurance for small businesses.

Health Insurance For Texas Small Business FAQs: