Health Insurance

Small Business Health Insurance


Health insurance for a small business is often provided for the employees by the employer, although it is not required. In good business practices, it is often used as an incentive to hire the best people. For the sake of definition, a small business is considered to have an average of two, but not more than 50, employees.



What types of small business health insurance are available to me?
Most small business owners provide health insurance through group plans which use organized medical networks. There are several types of networks: HMOs, PPOs, POSs, and the new Health Savings Accounts. You should know about each of them because each has characteristics that will affect your choice for new health insurance.

HMOs often have lower premiums but they must be available in close proximity to your employees and the workplace. PPOs and POSs tend to cost slightly more but are flexible for your employees, allowing them additional choices of doctors and medical care. Choices often make people happier. The Health Savings Accounts (HSAs) are new and can provide a means for tax-free savings for you and your employees. For your convenience, each type of group health insurance network has detailed descriptions elsewhere in the website, as well as in the Glossary.



What are purchasing groups?
Small businesses can also join together to form a pool which then acts as a purchasing group for health insurance. There are many types of pools or alliances, some of which can be statewide. Information about these pools is often available from your Chamber of Commerce or your state insurance commissioner. Much depends on which state in which you live, as to whether these alliances will work for you.



How can I lower the cost of my insurance plan?
To lower the cost of an insurance plan, you will soon learn that changing the deductible affects the premium more than anything else. Other coverages in an insurance plan affect cost also. There are optional coverages that can be included in group plans. Some small businesses include dental, vision, and alternative medicine options. Of course, more options mean higher premiums. Also, there are two maximum limits in insurance plans that can also affect the premium price: the maximum limit for each claim and the maximum limit over a person’s lifetime. The higher the limits, the higher the premium will be for you.

For the small business owner looking for health insurance, these are the main points to consider:

Most small businesses provide health insurance through a group plan.
You should understand the various types of networks used in group health policies (HMOs, PPOs, POSs and new Health Savings Accounts).
The amount of the deductible (which you choose when setting up the plan) greatly affects what you will pay for the premium.
It might help to compare your final two possible plans by running some totals: compare the annual premium you would pay and the speculated amount your employees would pay out-of-pocket yearly with both final choices. See what the differences are money-wise and if both you and your employees can live with the amounts.
Your decision about which type of group health insurance will probably come down to a compromise, considering your total costs for the policy, the services provided, and the probable ability of your employees to pay out-of-pocket expenses.
Some states allow small businesses to form alliances which then purchase group insurance at a savings.


TIP: To make the quote process faster and easier, you'll need to have the following information on hand:


the zip code of your business
the number of employees you want to enroll in the plan
the date your company started
the date you'll like coverage to begin
the names/initials of each employee
the home zip code of each employee
each employee's date of birth
each employee's dependents, including spouse and number of children
 

What is the difference between small business health insurance and group health insurance?
Group health insurance is provided to members of a group of persons, as employees of one or more employers or members of associations or labor unions. The term is usually used to distinguish this type of health insurance from individual health insurance. Group health insurance has some tax advantages.

Small business health insurance is provided organizations or businesses with 2 – 50 people. A small business health insurance plan provides medical care for yourself and your employees, as well as helping spread the financial risk between all the members, which usually means lower premiums and more extensive coverage for everyone. Employer contributions to a small business health insurance plan are generally 100% tax deductible, and employees save on payroll taxes. Small businesses (and certain organizations, like non-profits) are generally eligible for group health insurance so long as they can show two or more full-time taxable employees.



Small Business Health Insurance News
Health Insurance Market Changing for Employers and Employees
According to a recent study by Mike Simonds of UnumProvident, the rapidly changing employee benefits market is creating a number of challenges for employers. Below are some of the key points mentioned in the article.

A one-size-fits-all benefits program is no longer viable, given today’s diverse workforce.


In 2005, health expenditures represented 16% of the Gross Domestic Product, and health care spending is expected to reach $4 trillion and 20% of the GDP by 2015


Increased competition to attract the best employees requires employers to offer a competitive benefits package with a wide choice of coverage


Supplemental or ancillary benefits let employers offer a robust benefits program while keeping costs under control. Offering supplemental benefits on top of the “foundation” benefits shows that employers are thinking more broadly about employee needs.


Supplemental benefits can help employers compete in a tight labor market by providing more choices for employees and helping to fill any gaps in coverage


Women outpace men as purchasers of supplemental products, and employees age 30 to 49 are the most common purchasers of these benefits.


Small Businesses Struggle To Afford Employer Health Insurance
American Public Media's "Marketplace" examined how small businesses are dealing with rapidly rising employee health insurance costs. "Marketplace" profiled Lincoln Precision Machining, a Massachusetts company with about 20 employees that has seen health insurance premiums for each worker increase from $460 per month in 1999 to nearly $1,500 per month today. The company used to pay the entire premium but now requires workers to pay about $300 per month.