Health insurance is an important benefit for most American workers, including those who work in agriculture. In fact, almost half of Americans have health insurance through their employer, according to Kaiser Family Foundation research.
But farmers and farm workers are more likely than the rest of the population to go without health insurance. Figures from the U.S. Department of Agriculture show that in 2015, 9.1 percent of the U.S. population had no form of health insurance. In comparison, 10.7 percent of farm household members lacked health insurance, indicating that they faced slightly higher health-related financial risks than the general population.
With the agricultural workforce shrinking, farmers who offer health insurance coverage to their employees may have an advantage in recruiting and retaining workers. Finding an appropriate health insurance plan may be more feasible than you expect, as there are a number of different options available to you.
Farmers have watched their healthcare costs skyrocket in recent years, according to AgWeek. And as the cost of healthcare continues to rise, having appropriate health insurance coverage may be a relief to many workers and their families. Healthcare spending in the U.S. grew to $11,582 per person in 2019, according to data from the U.S. Center for Medicare and Medicaid Services.
For those who don’t have employer-sponsored health insurance, getting coverage on their own can be costly, as well as a hassle. In 2019, average annual premiums for employer-provided health coverage for a family of four cost $20,576, according to data from the Kaiser Family Foundation.
Not only is the cost of healthcare worrisome for many people, but the threat of illness is a legitimate concern for many farm families and workers. In the age of coronavirus, as Americans brace for potential new viruses or variants, it can be especially comforting to have the assurance that they’d be covered in case of an illness.
Also, offering health insurance for workers on your farm can give you a competitive edge. American farmers have long competed for qualified workers, with an ongoing labor shortage in the agricultural industry. Offering health insurance may be a way to recruit workers more easily and build employee loyalty to keep employees working at your farm year after year.
If you’ve decided to get health insurance for your family and your employees, that’s only the first step. There are actually several different ways to go about securing health insurance, and each farm owner will need to decide which method will work best for their particular situation.
The Small Business Health Options Program (SHOP) is federal government’s group health plan for businesses that employ at least one full-time worker who is not an owner, spouse, or business partner.
With SHOP, owners must offer health insurance coverage to every full-time employee, but you get to decide how much of the premiums you will pay, whether you will offer insurance to employees’ dependents or not, and how long new employees will have to wait before they can access the health benefits.
Enrolling in SHOP is the only way for an employer to take advantage of the Small Business Health Care Tax Credit. To qualify for the tax credit, you must have fewer than 25 full-time employees making an average salary of about $50,000 or less. You must pay at least 50 percent of the premium for each employee enrolled in the health plan (but not for their dependents), and the tax credit can be up to 50 percent of all health premiums paid.
Each state has its own SHOP guidelines, so the plans may be more affordable or farm-friendly in some states. To get one, you’ll have to find a primary SHOP insurer in your state; while the plans are sponsored by the federal government, they are offered by private insurance companies and are purchased through insurance brokers or directly from the company.
You can determine whether your farm qualifies for a SHOP health plan by using the federal government’s Full-Time Employee Equivalent calculator. If you do qualify for SHOP, you can also use an online premium checker to find out the prices of plans available in your area.
An AHP is a type of group medical insurance for employers that allows smaller companies to join together and access the savings on health insurance that are usually associated with large group medical coverage.
AHPs have more flexibility than health plans available through the Affordable Care Act (ACA) Marketplace. For example, associations can allow members to join their health plans at any time of the year, rather than only during the open enrollment period of November and December, like ACA plans.
Also, the ACA does not allow most plans to determine premiums based on health status or preexisting conditions, but AHPs have more flexibility to set premiums on an individual basis. AHPs also are not required to cover everything that ACA requires other health plans to cover. That means that you may be able to find an AHP with lower costs than a traditional group health plan, especially if you and your employees are in good health. However, if you, your family members, or employees have chronic conditions, an AHP plan may not provide the level of coverage you need.
With the agricultural workforce shrinking, farmers who offer health insurance coverage to their employees may have an advantage in recruiting and retaining workers.
Many farmers may be able to access group health insurance through an association such as a local farmer’s cooperative, state farm bureau, or other group. Check with your farm association to see if they offer an AHP.
If not, you may be able to join with other farmers and start your own. In 2018, the Department of Labor issued a new rule intended to increase access to AHPs, according to the National Academy for State Health Policy. That new rule allows business owners to form an association simply for the purpose of purchasing and obtaining health insurance coverage, as long as all plan members share the same industry or profession. Previously, forming an association strictly for health insurance reasons was forbidden.
A Qualified Small Employer Health Reimbursement Arrangement offers many of the same tax benefits as a group health plan but often at a lower cost to employers. It is an employer-funded group health plan from which employees are reimbursed tax-free for qualified medical expenses up to a fixed dollar amount per year.
Basically, the employer decides how much they will contribute to their employees’ health care costs, up to the annual maximum. For 2021, the maximum contribution is $5,300 ($441.67 monthly) for an individual employee or $10,700 ($891.67 monthly). Employees pay their healthcare providers or their own insurance companies for their health care costs, and then submit receipts to be reimbursed by the HRA. All reimbursements paid by the HRA are tax deductible.
If an employee does not submit enough claims to use his or her allotment for the year, the employer keeps the money. However, the employer may choose to roll the amount over to the next year as long as the employee remains employed by the business.
You can set up an HRA on your own, but a licensed tax professional, benefits specialist, or health insurance agent or broker can be helpful. To qualify for an HRA, a business must employ fewer than 50 full-time employees and must not offer another group health plan. The business must also offer the HRA to all full-time employees with the same terms; reimbursement amounts may vary only based on the age and the number of individuals covered.
An employer can set up an HRA at any time during the year. Doing so may be cheaper than covering purchasing health insurance for your workers, depending on the plans available in your state. However, the HRA works best if each employee accesses his or her own individual health plan and uses the HRA as reimbursement for premiums and other expenses. Otherwise, in case of a catastrophic accident or illness, the HRA would probably not cover the employee’s expenses.
The federal government’s health insurance exchange offers marketplace health coverage for individuals and families. If you choose to fund an HRA, you and your employees could each purchase your own health plan through the marketplace. Then you could use the HRA to reimburse employees for their marketplace premiums.
If you can’t find a group health plan that works for your family and your employees, or if you aren’t ready to commit the funds to covering healthcare for the entire operation, marketplace health plans may be the best bet. The options available vary from state to state, so you and your employees can browse through the choices and select the plans that work best for each individual or household.
Also, government subsidies are available to help cover the cost of the monthly premiums for some people. To qualify for subsidies, your income must be no more than 400 percent of the federal poverty level. You and your employees can use this calculator to determine your eligibility for subsidies and the size of the subsidy for which you might qualify.
In addition to the possibility of subsidies to help offset the cost, marketplace plans always provide preventive care and wellness visits with no copay or deductible. Insurance companies cannot deny coverage on the basis of pre-existing conditions, and there are no lifetime limits on benefits.
However, in order to comply with all the ACA requirements, many insurance companies cut back on their provider networks. That means your marketplace health care plan may offer only a small number of providers whose services are covered. Also, marketplace coverage is available only during the open enrollment period during November and December of each year, unless you have a new job or a change in family status such as a marriage, divorce or new child, which makes it necessary to acquire new coverage at other times during the year.
In some states, marketplace coverage may be the most affordable option available, especially if you and your employees qualify for government subsidies. However, in states with only one or two health insurance companies offering marketplace plans, the costs may be higher due to a lack of competition. If you or your employees do not qualify for a subsidy, a marketplace plan can be very costly.
You and your employees will each need to enroll separately in a marketplace health plan. You can do so by visiting Healthcare.gov and providing the requested information.
Determining the right approach to offering health insurance for your farm and its employees may seem daunting. But taking time to understand the options and launching a health coverage benefit will be worth the effort, resulting in peace of mind for your family and your employees.
And if you're still feeling unsure about your choices, consider finding an independent insurance broker who can help you weigh the pros and cons of each so you can feel confident in your choice.
The information provided herein is provided gratis, and solely as reference. The information is not intended to be, nor shall it be a farmer’s sole and exclusive source of information on the subject matter. Corteva Agriscience makes no warranty, or other representation, express or implied, as to the accuracy of any information contained herein, and cannot assume responsibility or liability for reliance on or use of this information by any farmer in making specific decisions on health insurance, which in all cases is the responsibility of the farmer.