The Comprehensive Colorado Small Business Health Insurance Guide

Everything you need to know about setting up an affordable, sustainable Colorado small business health insurance plan for a small group of 49 employees or fewer.

Colorado Small Business Health Insurance

By Wiley Long – Updated Sept 18, 2023
Reviewed by Christine Corsini – Fact checked by Misty Berryman

This guide is especially designed for a small business with 49 employees or fewer, looking for health insurance either headquartered in or with significant operations in Colorado.

It is also for business owners who recognize that conventional approaches to small business group health insurance are becoming increasingly unaffordable for both businesses and employees. 

This guide explores the five major options that Colorado small businesses have when it comes to providing employees with affordable access to health care: 

  • Traditional group medical insurance plans
  • Health sharing plans
  • Employee health savings accounts (HSAs)
  • Small employer health reimbursement arrangements (HRAs)
  • Employee direct primary care (DPC) plans

Understanding Colorado Small Business Health Insurance

Small businesses all over the Rocky Mountain State are finding themselves struggling to keep up with the steadily increasing cost of offering competitive medical benefits to employees and their families.

Nationwide, the average annual employer insurance premium has exceeded $7,911 for single coverage, including both employer and employee contributions, according to 2022 data from the Kaiser Family Foundation. That represents an increase of four percent from the previous year, and an 18% increase since 2017.

The cost of providing health care for employees and their families  has become daunting. In 2022, the average combined employer and employee premiums to cover a worker and family together reached a total of $22,463 – an increase of 20% since 2017. 

Understanding Colorado Small Business Health Insurance

For employers in the more sparsely populated Western Slope counties of Colorado, these costs run even higher.

It’s not just premiums putting healthcare out of employees’ reach. The relentlessly rising cost of healthcare is also showing up in high deductibles, as well.

Among workers with single coverage and a general annual deductible, the average deductible amount is $1,763, according to the Kaiser Family Foundation’s 2022 Employer Health Survey.

But deductibles for workers at smaller firms are much higher than for workers at large employers, $2,543 vs. $1,493.

And despite the passage of the so-called “Affordable Care Act,” actually accessing health care even among covered workers has gotten more and more expensive: among workers with single coverage and any deductible, the average deductible amount has increased 17% over the last five years, and 61% over the last decade.

Moreover, over the past five years, the percentage of covered workers with a general annual deductible of $2,000 or more for single coverage has grown from 22% to 32%.

Any effective strategy for creating a health benefits strategy that helps attract and retain quality employees has to function on multiple levels:

  • It has to be affordable on a month-to-month basis.
  • Deductibles and copays have to be affordable, so employees won’t have to forgo or delay needed preventative and maintenance care because of cost. 

Why Are Colorado Small Business Health Insurance Costs Going Up?

Why Are Colorado Small Business Health Insurance Costs Going Up?

There are many reasons for increasing health care costs: inflation, the increasingly litigious society we live in, and a shortage of qualified medical practitioners all play a role. So do increasingly expensive new technologies and advances in prescription drugs.

Also, traditional health insurance is increasingly becoming a blunt and cost-inefficient tool for providing affordable access to healthcare for millions of small business employees. The Affordable Care Act requires plan administrators to lard up policies with benefits that employees rarely want or need – driving premiums higher and higher, while offering relatively little value in return.

Large employers have the capacity to self-insure. Small employers, in contrast, have been forced to innovate, and find ways to provide workers with access to the care they need – at affordable costs.

Thanks to innovations like healthsharing, health savings accounts, and direct primary care membership plans, many small businesses throughout Colorado have found viable alternatives to relying on bloated, overpriced, overregulated group health insurance policies.

Here are five solutions available to Colorado small businesses that may help ease the financial strain, while still helping make appropriate medical care affordable for your employees and their families. 

Traditional Group Medical Insurance

Traditional group medical insurance is the most common health benefits tool for businesses of all sizes. It’s also the most expensive.

Still, despite the cost, traditional health insurance has several advantages:

  • Pre-existing conditions are covered as soon as the policy becomes effective.
  • Employees are familiar with the benefit, and recognize its value. 
  • It’s effective at covering very high-ticket medical procedures and catastrophic illnesses and injuries. 
  • Offering health insurance may qualify small businesses for the Small Business Health Insurance Tax Credit.
  • Additionally, by offering health insurance, some Colorado small businesses may qualify for the Colorado Enterprise Zone Employer-Sponsored Health Insurance Tax Credit, worth up to $1,000 per employee. Both tax credits require employers to contribute at least 50% of the premium of employee group health insurance plans to qualify. 
  • Businesses with over 50 employees don’t have to pay a penalty if they provide health insurance to all full-time workers.

However, traditional health insurance has significant disadvantages, as well. Specifically:

  • Health insurance laws require policies to include expensive coverages that many employees may not want or need. But they add to the monthly cost of the premium.
  • Health insurance sometimes may also cover medical procedures that some may find objectionable, such as elective abortion or in vitro fertilization. 
  • Traditional health insurance does an admirable job of providing protection against potentially catastrophic health care costs for people with pre-existing conditions. But it’s cost prohibitive: many covered workers find that they still can’t afford to pay their share of premiums. They also find they can’t afford to see a doctor and get the preventative or diagnostic care they need, because of high deductibles and copays.

As a result, too many workers delay or go without important treatments, chronic disease management, or prescription drugs they need to stay healthy. This just causes bigger and more expensive claims down the road, which is very expensive for employers and employees alike. 

Colorado Small Business Health Insurance Tax Credit

The tax code provides incentives for small businesses to offer health benefits to employees. One of the most powerful is the federal Small Business Health Insurance Tax Credit.

This tax credit is worth up to 50% of the premiums you pay (33% in the case of non-profit institutions). It’s designed to offset the costs of offering health insurance benefits that small businesses incur. 

You may qualify for the credit if: 

  • You have 25 full-time equivalent employees or fewer
  • Offer a group health plan and pay at least 50% of the premiums for your employees
  • The average salary for these employees is less than $56,000 per year, as of 2023
  • You offer coverage to all full-time employees. (You are not required to extend coverage to spouses or family members. But it may be a good idea in order to recruit and retain the best available talent!) 

For Colorado small businesses, you must purchase health insurance through the Connect for Health Colorado exchange or another ACA-qualified exchange where you have operations and employees.

Colorado Small Business Health Insurance Tax Credit

Note: You can claim the credit for not more than two consecutive years.

In addition to the tax credit, businesses are entitled to deduct the cost of employee health insurance premiums and all plan administration costs as a compensation expense.

Colorado small businesses may also qualify for the Colorado Enterprise Zone Employer-Sponsored Tax Credit, as mentioned above.

Types of Colorado Small Business Health Insurance Plans

Most Colorado small business group health insurance plans come in these basic types: 

Health Maintenance Organizations (HMOs)

Insurance plans that work exclusively with doctors that are contracted with the company. With HMOs, employees must use in-network care to be covered (with some rare and emergency exceptions). Plan members must get a referral from their primary care physician before seeing a specialist.

Preferred Provider Organizations (PPOs)

These group plans have more choice to use out-of-network care. Plan members may pay more out of pocket for non-emergency out-of-network care. But these plans are typically not as restrictive as HMOs.

Patients can normally see a specialist without getting a referral from their primary care physician. 

Exclusive Provider Organizations (EPOs)

These are managed care plans similar to HMOs  where services are covered only if you use doctors, specialists, or hospitals in the plan’s network (except in an emergency).

These plans are designed for affordability. But patients have little or no flexibility when it comes to choosing their own providers. 

Point of Service Plans (POS)

These plans are not as common as HMOs and PPOs. POS plans combine elements of both HMOs and PPOs, and require the use of a primary care doctor for all referrals.

Healthsharing – An Affordable Alternative to Traditional Health Insurance Plans

For many people, accessing medical care through a health sharing plan, rather than a traditional health insurance policy, can save up to 40% to 50% compared to the typical unsubsidized cost of traditional health insurance premiums.

This generally amounts to thousands of dollars in savings every year for a family of four – whether the healthsharing plan is paid for by the workers themselves or by their employer.

While both healthsharing plans and health insurance help individuals spread the risk of unexpected high medical bills across many people, they have important differences. 

How Does Healthsharing Work? 

Healthsharing, also known as medical cost sharing, is an arrangement where members voluntarily contribute money into a shared pool, which is then used to pay for medical expenses of members who have a medical need.

Members typically agree to a statement of faith, or a set of shared values and principles. Members generally also agree to live a healthy lifestyle and abstain from illegal drug use, drinking to excess, and in some cases, extramarital sex.

Many healthsharing plans – but not all – are explicitly Christian, and their membership guidelines reflect that.

However, there are many secular healthsharing plans as well, that are affiliated with no religious denomination, and do not require regular service attendance.

There are also healthsharing organizations devoted to serving the Jewish community, Catholics, Latter Day Saints, Universalists, and other religious communities as well.

Healthsharing Vs. Health Insurance

Healthsharing is not the same thing as health insurance. Instead, healthsharing is a more affordable alternative to higher-cost health insurance plans.

While both have a similar aim of helping plan members pay for unexpected medical bills, they have important differences you should be aware of.

Health Insurance


Higher cost model. The insurance company pays covered medical bills directly.An affordable alternative to health insurance. Healthshare members agree to share each others medical bills directly. Members’ bills are not a direct obligation of the healthsharing organization.
Typically run by for-profit corporations or subsidiaries.Sharing is facilitated by non-profit 501(c)(3) organizations.
Must cover pre-existing conditions from first day of enrollmentTypically impose a waiting period before costs related to pre-existing conditions become fully shareable.
Must include ten “minimum essential coverages.”May exclude minimum essential coverages, such as drug addictions treatment, psychiatric treatment, or injuries from drunk driving to reduce costs.
Maternity benefits included for all womenMaternity benefits may be limited for unmarried women. May require both parents to be on the plan.
Must enroll during limited enrollment periodsAccept applicants all year round, subject to limitations on sharing for pre-existing conditions.

Healthsharing Advantages

The chief advantage to choosing a healthsharing plan over a traditional group health insurance plan is cost. As mentioned, health sharing plans are typically available at just a fraction of the cost of a full-fledged Affordable Care Act-qualified health insurance policy.

The total cost of providing insurance for a family of four in Colorado typically tops $1,200 per month or more, whereas it’s quite common for employers to find healthsharing plans for less than $700 per month.

The difference in cost can amount to thousands of dollars per month in savings by switching to healthsharing.

Some healthsharing plans also tend to appeal to members with Christian or Biblical values. So you can easily find healthsharing plans that will not use your money or your-employees’ money to fund procedures or benefits you may find objectionable.

Healthsharing also enables plan members to choose their own doctors and other providers. Where most workplace group health insurance plans like HMOs, PPOs and EPOs impose narrow care networks on plan members, most healthshare plans allow your employees to use their benefits with any provider.

Healthsharing Disadvantages

Healthsharing has some disadvantages as well, compared to traditional health insurance:

  • Benefits are limited for pre-existing conditions: A waiting period may apply for the first few years of plan membership.
  • Waiting periods may also apply before the plan will share costs for elective or illness-related surgeries, though costs for surgeries related to injuries will still be generally shareable. 
  • Waiting periods may apply to maternity benefits, or unmarried women may not be eligible for maternity benefits in some cases. 
  • Healthsharing does not qualify for the small business health insurance tax credit, nor for Colorado enterprise zone small business employer-sponsored tax credit.
  • Employees cannot deduct contributions to healthsharing accounts, though employers generally can. 
  • Healthsharing plans typically have less robust benefits for mental health treatment. drug addictions treatment costs, or prescription drugs.  

Six insurance companies offer group health insurance plans in Colorado

  • Anthem (as HMO Colorado)
  • Anthem (Rocky Mountain Hospital & Medical Service, Inc.)
  • Kaiser Foundation Health Plan of Colorado
  • Kaiser Permanente Insurance Company
  • United Healthcare Insurance Company
  • United Healthcare of Colorado, Inc. 

    Health Savings Accounts

    A health savings account (HSA) is a tax-advantaged savings account that your employees can use to pay for medical expenses, including deductibles, copays, co-insurance, prescription drugs, durable medical equipment, and even medical-related travel costs. 

    HSAs provide a triple tax advantage: 

    • Contributions are pre-tax.
    • Accumulation in the HSA is tax-free.
    • Withdrawals to pay medical expenses are free of income tax and penalties.

    Additionally, unused amounts continue to accumulate tax-deferred, and are available at age 65 to help supplement retirement income, penalty free. You just pay income taxes on amounts you withdraw, just as you would with a traditional IRA.

    In effect, HSAs allow your employees to pay qualified medical expenses tax free. This amounts to a very significant tax benefit when it comes to paying medical bills – with a retirement kicker.

    HSAs can be used to pay for a wide range of qualified medical expenses, including deductibles, copayments, and prescription medications. However, non-medical expenses are subject to income tax and a 20% penalty if withdrawn before age 65.

    As of 2023, HSA owners or their employees can contribute up to $3,850 for self-only accounts, or up to $7,750 for couples and families per year.

    Contribution eligibility is not means-tested: HSA owners can contribute the entire amount regardless of income.

    However, ONLY individuals covered by a special high deductible insurance policy may benefit from contributions to an HSA.

    Health Savings Accounts

    To qualify as a high-deductible health plan, the policy must have a minimum deductible of $1,500 for employee-only plans, or $3,000 for family plans, as of 2023.

    Taxpayers age 55 or older can benefit from an additional $1,000 in “catch-up” HSA contributions as of 2023.

    Maximum allowable contributions$3,850 for individuals
    $7,750 for couples and families
    Catch-up contributions - Age 55 and older$1,000
    Minimum HDHP deductible:$1,500 for individuals
    $3,000 for families
    Maximum HDHP out-of-pocket amounts$7,500 self-only plans
    $15,000 couples

    Key Takeaways on HSAs

    • Employers can help workers take advantage of the tremendous tax benefits and savings opportunities of HSAs by adding a qualified HDHP to their menu of health insurance offerings. 
    • Employees can qualify to contribute to HSAs simply by choosing the HDHP option. 
    • Employers can also contribute directly to employee HSAs, as long as combined employer-employee contributions do not exceed the overall annual maximum allowable contribution for the year.
    • Employer contributions have all the same tax benefits to the employee, and are tax deductible to the employer and tax-free to the employee. 
    • The availability of an HSA makes it much easier for employees to handle a higher deductible.
    • Since the deductible can be higher, then premiums can be much lower – easing the financial strain for employers. 
    • Inexpensive to implement: adding an HDHP to your Colorado small business group health insurance plan costs little or nothing. 

    Advantages of Health Savings Accounts

    Health savings accounts offer multiple advantages for Colorado small businesses:

    • Tax Savings. HSAs offer triple tax savings. Contributions made to the account are tax-deductible, the interest and investment earnings on the account are tax-free, and withdrawals made for qualified medical expenses are also tax-free.
    • Control. HSAs give individuals more control over their healthcare spending. They can use the money in the account to pay for qualified medical expenses that are not covered by their insurance, and they can decide how much money to contribute to the account each year.
    • Flexibility. Employers can choose whether to contribute HSA dollars to employees’ accounts, and how much. Furthermore, there is no year-to-year obligation to keep contributing. Employers can contribute more money (up to the annual maximums), less money, or no money in any given year. 
    • Vesting. HSA contributions vest immediately to the employee. Unlike flexible spending accounts (FSAs), HSAs have no “use it or lose it” rule, so any funds that are not used during the year can be rolled over to the next year. This makes HSAs a good choice for individuals who want to save for future healthcare expenses.
    • Portability. HSAs are portable, which means that if an individual changes jobs or insurance plans, they can take their HSA with them. This is unlike other types of healthcare accounts, such as FSAs, which are tied to a specific employer.
    • Investment Options. HSAs support self-directed investing. That means that individuals aren’t limited to passbook savings-level interest rates and default account settings. Instead, HSA owners can invest the funds in the account as they choose and potentially earn a higher return on their money over time. This makes HSAs a good option for individuals who want to save for future healthcare expenses and also want to invest their money.

    Direct Primary Care Memberships

    Traditional health insurance and healthsharing plans are both very effective at helping employees pay for major medical events and catastrophic illnesses and injuries.

    But even with insurance, high co-pays and high deductibles often make accessing even routine health care from family doctors out of reach for many employees and their families.

    On average, copayments run $27 for a primary care visit, and $44 for specialty care physician appointments. Meanwhile, average coinsurance rates 19% for primary care and 20% for specialty care. And that’s only after the deductible is met. These amounts are similar to those observed in 2021.

    Direct Primary Care Memberships

    For lower-wage workers with chronic health conditions or those with young children who frequently need to see a pediatrician, these costs add up fast. They represent a significant barrier to healthcare access – and one that’s often not well understood by more senior managers.

    Because of these out-of-pocket costs, some individuals skip necessary medical care. This results in medical conditions going untreated, resulting in more serious health problems, absenteeism, presenteeism, and higher healthcare costs in the long run.

    Those costs are quickly passed back to the company in the form of higher health insurance premiums.

    That’s why many small businesses should consider providing a direct primary care (DPC) benefit. 

    What is Direct Primary Care?

    In direct primary care, patients or employers bypass the insurance industry and pay a flat monthly subscription to a primary care physician or practice. In exchange, the plan member receives an unlimited number of virtual or in-person visits with their primary care physician.

    The predictable and affordable flat monthly fee covers all or most traditional primary care services, including office visits, preventative care, vaccinations, sick note visits , medication updates and management, well baby visits, and basic screenings and checkups.

    Some DPC plans include formal chronic disease management services as well.

    Direct Primary Care Advantages

    The DPC model offers several advantages compared to traditional health insurance.

    First, enrolled employees can now see their doctor as often as they need to, and get the care they need, without worrying about the cost. They no longer have to choose between getting their baby to the doctor and paying the gas bill at the end of the month. And they won’t have to put off getting care.

    Second, with unlimited telehealth benefits, they can “visit” their doctor during their lunch break at work. They won’t have to take a half-day off work that they can’t afford just to keep a medical appointment. That’s less disruptive for employers and employees alike.

    The easy access to 24/7 telehealth means they can avoid expensive after-hours visits to urgent care clinics and hospital emergency rooms.

    Third, having a strong DPC plan in place often makes it much easier for employees to choose a much more cost-efficient high-deductible health plan. Or better yet, they may be able to jettison an expensive group health insurance policy altogether, and instead combine DPC with a much lower cost healthsharing plan.

    Meanwhile, DPC patients often find they have a much better healthcare experience under DPC. Under the traditional insurance model, primary care physicians must pay a room full of billing specialists who are constantly running down insurance companies in an effort to get paid.

    Doctors must also submit reams of documentation to get patients’ claims approved and paid, which contributes to overhead even more.

    This means that today’s insurance-based primary care doctors must maintain a patient load in the multiple thousands just to break even. 

    With the DPC model, primary care physicians don’t need a small army of billing specialists on staff. Their overhead is much lower. And their patient load can be much lower as well. A typical DPC physician can have a patient load of just 600, rather than 2000.

    They can therefore spend much more “face time” with each patient, and provide more personalized care.

    The Best Healthcare Strategies for Colorado Small Businesses


    Option 1:  Do Nothing

    Many small businesses choose not to offer a health plan at all. Under the Affordable Care Act, businesses with fewer than 50 full-time employees are not required to offer health insurance.

    Businesses who don’t offer health insurance at all save money in the short term on health care premiums. But the long-term costs of doing nothing are staggering.

    First, employees value employee benefits. Most employees will work for a lower salary or hourly wage if they get employer health benefits. Offering nothing puts small businesses at a distinct disadvantage when competing for quality talent.

    In today’s competitive talent market, good employees will have little trouble finding a job with health benefits. Businesses will be stuck with whoever’s left and suffering in terms of turnover costs as they constantly struggle to hire and train replacement workers.

    Failing to take care of employees’ health shows up in other ways, as well.  According to the 2021 Health Benefits Survey from the the Kaiser Family Foundation, group health insurance plans are strongly correlated with the following benefits:

    • Fewer annual sick days
    • Higher job satisfaction levels
    • Lower turnover
    • Higher productivity

    In practice, only very small businesses embrace this strategy for long, mainly because they frequently go out of business in short order. The available talent pool makes it very difficult for these companies to grow and remain competitive. 

    Fortunately, for many employers and workers, there are better approaches available. Depending on your company and employee demographics, you may be able to save significant amounts of money, improve protection and health care access for your employees, or both.


    Option 2: Sponsor a Formal Employee Group Health Insurance Plan

    Group health plans are extremely costly. But they have their place, especially for an older workforce or a workforce that happens to have a lot of people with pre-existing conditions.

    Most employers are familiar with the basics of offering a group health insurance plan.

    One way to make the traditional health insurance route as cost-efficient as possible for both workers and employers is to emphasize a high-deductible health plan (HDHP) that qualifies enrollees  for health savings accounts, as described above.

    High-deductible health plans are significantly less expensive per month than other plans. The savings can free up money you can use to help employees cover the higher deductibles.

    These include: 

    • Employer pre-tax contributions to HSAs (saving on payroll taxes, as well).
    • Addition or expansion of a health reimbursement arrangement, such as a QSEHRA, or Qualified Small Employer Health Reimbursement Arrangement
    • Additional voluntary benefits such as accident insurance, critical illness insurance, or life insurance, which you can help employees pay, as well 


    Option 3: Skip group health altogether. Instead, help employees buy their own insurance via a Qualified Small Employer HRA (QSEHRA)

    A Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) is a special provision available only to small businesses with fewer than 50 full-time employees that do not offer a group health plan.

    A QSEHRA allows these small businesses to set up a tax-free benefit to reimburse their employees for certain medical expenses, such as health insurance premiums and out-of-pocket costs. 

    Here’s how it works: 

    • The employer sets up a QSEHRA plan and decides on the reimbursement amount they will offer to each employee. The amount can vary based on factors such as job position, length of service, and family size.
    • Employees MAY purchase individual health insurance, but are not required to. In some cases, they may get health insurance through a spouse’s employer-sponsored plan. 
    • If an employee incurs eligible medical expenses, such as health insurance premiums, co-pays, and deductibles, they submit a reimbursement claim and proof of expense to the employer. 
    • Employees commonly use their QSEHRA benefit to pay health insurance premiums. 
    • You then reimburse the employee, up to the maximum amount you set in your plan. 

    Benefits are free of federal and Colorado state income taxes. Everything you as the employer contributes to your QSEHRA is tax deductible as a compensation expense. 

    QSEHRA Contribution Limits

    For 2023, the maximum QSEHRA contribution is $5,850 for individual employees (this adds up to $487.50 per month) and $11,800 for employees with a family. This comes out to $983.33 per month.

    Advantages and Disadvantages

    The key advantage to a QSEHRA, however, is that it preserves the benefit of federal premium tax credit subsidies for health insurance under the Affordable Care Act. However, the subsidy may be reduced commensurately with HRA benefits received.

    As a Colorado employer, you have complete flexibility to choose the amount of QSEHRA benefits you make available and the money remains in your control as general operating capital until you actually pay out the benefit. You don’t have to commit capital in advance. This can be a big benefit for small businesses where cash flow is a significant issue.

    Meanwhile, offering a QSEHRA benefit in lieu of health insurance enables employees to make their own decisions, and choose the health insurance strategy that makes the most sense for them and their individual circumstances.

    With a QSEHRA, your workers aren’t restricted to any one-size-fits-all employer group health plan that HR picks for them. Instead, they can buy any health insurance plan on the market, such as the Connect For Health Colorado exchange.

    If they choose a lower-premium, higher deductible plan, they can use the remainder of QSEHRA benefits to help them cover the higher deductible, as well as any copays, coinsurance, or prescription drug charges the plan doesn’t pay directly.

    But if they stay healthy and don’t consume a lot of healthcare, you may not have to pay out additional HRA benefits under your QSEHRA. Just the employees’ health insurance premiums – again, saving money for both you and your employee.

    Some employees may forego health insurance completely, and choose a lower-cost healthsharing program. Healthsharing contributions are not eligible for QSEHRA reimbursement. But other out-of-pocket expenses are.

    Many Colorado employers are embracing this strategy for themselves and their employees. They’re dropping their group health insurance plans altogether, and migrating employees over to buying their own Connect for Health Colorado-qualified health insurance using their tax-free QSEHRA benefits, generating significant savings overall.


    Option 4: Offer an Individual Coverage HRA (ICHRA)

    This option is available to Colorado businesses of all sizes, not just small employees.

    Like the QSEHRA, the ICHRA allows employers to provide a tax-free benefit to help employers pay out-of-pocket medical expenses. ICHRA rules require employees to be enrolled in an ACA-qualified health insurance plan to receive HRA benefits.

    But there are some key differences, as well: 

    • There are no contribution limits. You can contribute any amount, and benefits are still tax-free to employees. 
    • Employers can discriminate between employee classes. ICHRAs require employees to be enrolled in a qualified health insurance plan to receive reimbursements. QSEHRAs do not. 
    • ICHRA beneficiaries do not receive ACA premium subsidies. However, this may not be a major factor with higher-paid workers, who may not qualify for much of a subsidy, anyway. 

    The employer can allow unused ICHRA benefits to roll forward from year to year.

    You cannot offer an ICHRA to any employee who is qualified for a traditional group health insurance plan sponsored by your company. You can, however, offer a bigger ICHRA benefit to older employees. 


    Option 5: Unleash the Power of Healthsharing

    Small employers with fewer than 50 full-time workers are not required by the ACA to offer health insurance at all.

    But you can still offer a very meaningful health plan to employees at a fraction of the cost of a full-fledged traditional health insurance premium by moving to healthsharing. Savings of several hundred dollars per month per employee is common, as healthsharing plans are typically only about half the price of a traditional group health insurance policy.

    Employees, for their part, enjoy several advantages:

    • No HMO-style narrow provider networks: most healthsharing plans allow members to use their benefits with any provider. 
    • No coinsurance amounts. Most expenses are 100% shareable once the member’s initial unshareable amount has been met.
    • Lower monthly out-of-pocket costs.

    Employers are having great success combining healthsharing plans with Direct Primary Care memberships, which help remove cost barriers and improve access to healthcare.

    While DPC memberships should not be used as a standalone benefit or a substitute for a real health insurance or healthsharing plan, they can be an affordable and invaluable companion benefit to healthsharing plans like DPC Direct.

    As an employer, you can create a group healthsharing plan.

    Note: healthsharing may not be a good option for some employees or family members. Healthsharing plans typically impose waiting periods on pre-existing conditions. Some employers make a healthsharing plan available to most employees and save significant amounts of money each month compared to a group health insurance plan.

    The savings are frequently more than sufficient to cover some additional assistance to employees with pre-existing conditions to help them buy their own individual coverage via Connect for Health Colorado – especially if the employee receives an ACA subsidy. 

    Colorado Small Business Health Insurance Conclusions

    Bloated, inefficient traditional health insurance plans, overregulation killing health insurance competition, and steadily increasing inflation have all combined to put pressure on Colorado small businesses to find alternatives.

    By combining innovative alternative healthcare strategies like access to healthsharing plans, direct primary care, health reimbursement arrangements, and the judicious use of voluntary benefits products like hospital and accident insurance, Colorado employers are able to reduce monthly coverage costs, provide employees with better access to care, and help employees take more control of their medical care experiences.

    Need help designing an affordable plan that combines some or all of these strategies, at a cost that’s realistic for both you and your workers? That’s where ColoHealth comes in!

    To schedule a free, no-obligation consultation and analysis, just click here, and make an appointment with one of our experienced Personal Benefits Managers!

    FAQs For Colorado Small Business Health Insurance

    What are the most popular health insurance plans among Colorado small businesses?

    As of 2023, the most popular group health insurance carriers among small businesses in Colorado include:


    • Cigna. This carrier is known for having lots of options for employers and employees to choose from. Cigna offers an indemnity-style plan that allows workers to see specialists without a referral. This is in contrast to HMO and EPO plans that severely restrict members’ ability to see a specialist for non-emergency care without a referral or preauthorization. 
    • Friday Health Plans. These plans aren’t available statewide, however. Their network is limited to Denver, Colorado Springs, Northeast Colorado, and the San Luis Valley
    • Anthem BlueCross/Blue Shield. This family of plans has the widest plan network in the state, which includes 90% of all doctors and hospitals nationwide.

    Can my employees use HRA benefits to pay monthly healthsharing contributions?

    No. Internal Revenue Code Section 213 defines what expenses are eligible for HRA reimbursement. Health insurance premiums are included. But since healthsharing plans are not insurance products, monthly healthsharing contributions are not eligible for HRA reimbursement.

    However, QSEHRAs don’t require employees to have health insurance to qualify to receive reimbursements. Employees can purchase their own healthsharing plans, and then use HRAs to help them cover out-of-pocket costs, such as initial unshareable amounts. 

    Can I provide additional assistance to employees to help them pay medical expenses without using an HRA?

    Yes. This is quite common. It’s called a “health stipend.”

    There are no real restrictions on employers’ ability to extend a health stipend to employees. Employers can set the terms of the stipend, and can discriminate based on class. You can offer the stipend to some employees and not others, provided you don’t discriminate on the basis of a worker’s membership in a protected class.

    Stipends have the advantage of complete employer flexibility.

    The disadvantage is that unlike HRA benefits and HSA contributions, anything an employee receives via a health stipend is taxable as ordinary income.

    For this reason, employers who provide health stipends to employees often “plus up” the benefit to account for the effects of income taxes. In Colorado, you should consider both federal and state level income taxes when calculating health stipends.

    What administrative requirements do I have as a Colorado employer if I want to offer an HRA?

    Employers must create a Summary Plan Description with the following information:


    • Plan year beginning and ending dates
    • Amount of benefits/funding amounts
    • Description of benefits/eligible expenses
    • Employee  eligibility criteria
    • Claims procedures
    • Plan and participant termination
    • Associated COBRA, HIPAA, and other federal mandates
    • Discussion of circumstances that would cause benefits to terminate

    You’ll also need to provide a formal notice to employees describing your HRA benefits, and how they may interact with any premium tax credits they may receive by buying their own health insurance over the Connect for Health Colorado exchange or other ACA exchange.

    You’ll also need to develop a procedure to handle appeals of denied reimbursement claims.

    You can find an IRS-approved ICHRA  model notification document here.

    What expenses are not eligible for HRA Reimbursement or not qualified for HSA withdrawals?

    Allowable medical expenses eligible for HRAs and HSAs are discussed in IRS Publication 502.

    Here are some examples of items that are not qualified for reimbursement under ICHRAs, QSEHRAs, and that are not qualified medical expenses for healths savings accounts: 


    • Babysitting and childcare expenses for healthy children
    • FSA or HSA contributions
    • Diaper services 
    • Medical care not consumed yet
    • Housekeeping or cooking services
    • Health club memberships
    • Swimming lessons
    • Weight loss programs
    • Controlled substances that are illegal under federal law
    • Cosmetic surgeries and procedures not related to the treatment of  illness/disease or remedying the impairment of normal bodily functions.
    • Maternity clothes
    • Personal use items, such as toothbrushes

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