Small Business and Health Insurance - What You Need to Know

At this time, most small businesses are not required to provide health insurance, but there are insurance regulations in some states. However, providing health care benefits will do more than follow regulations; it will attract new employees and help reduce staff turnover. Additionally, many small businesses can seem like a second family to owners and employees. A caring business owner wants to provide the best possible for their employees without going bankrupt. The key to providing health insurance is choosing the best type of policy possible.

States regulate health insurance providers, but there are federal laws protecting small businesses from discrimination. A provider, for example, cannot deny coverage to a small business because of a health problem or illness of an employee or their dependents. The Employee Retirement Income Security Act of 1974 (ERISA) established federal regulation for self-insured health plans, if small business owners choose to insure. However, most small businesses don't choose to self-insure.

Types of health insurance plans for small businesses

The National Association of Insurance Commissioners (NAIC) has compiled information on different types of insurance plans to help small business owners choose the best plans for their employees. Major medical plans include compensation plans, health maintenance organization (HMO) plans, preferred provider organization (PPO) plans, and point of service (POS) plans.

Compensation plans are major medical plans that give patients more freedom to choose their doctor than others. This plan usually has a deductible that the insured is responsible for paying before the insurance company starts making payments. Once the deductible is paid, the insurance covers a predetermined percentage of medical expenses, usually 80%.

HMO insurance plans do not offer the same flexibility as compensation plans. HMOs require the insured to choose a Preferred Care Provider (PCP) from a list of approved providers or network. The PCP chosen by the insured is responsible for all patient care. Seeing a doctor outside the network is not covered by an HMO, or it is covered at a much lower rate than doctors in the network. If a patient needs to see a specialist, the preferred healthcare provider will need to make a recommendation so that the insurer can honor any claims made by the specialist.

PPO plans offer more flexibility than HMO plans in choosing a doctor. Preferred supplier organizations contract with doctors and hospitals. People with PPO insurance plans are allowed to visit doctors and hospitals of their choice, but they will pay more to use someone outside of their preferred provider network.

Point of sale plans are a mix of PPO and HMO. Point of service plans require the insured to choose a PCP just like an HMO. However, they are allowed to pay more and see a doctor outside the network. The singular difference is that the insurance company will pay for an out-of-network visit if it is the result of a referral from the primary care physician.

Choosing a health insurance provider for your small business

Part of choosing a health insurance plan is choosing a provider. Only negotiate with licensed professionals and look for agents who have experience in small businesses. Be sure to speak to multiple agents to ensure the best possible rate is negotiated. Always ask the agent to explain the insurance rates for the past five years as well as the differences between the types of plans that the agent has to offer. You shouldn't trust an agent who doesn't want to answer questions to manage your accounts.

When choosing an agent and insurance plan, ask other companies about their experiences with their agents and insurance companies. It is also important to find out what employees need from their health insurance policies. Hold a meeting and allow employees to address their concerns. Consider the demographics of your employees and their medical needs.

Small Business Health Insurance Requirements

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Deductibles are the best way for employers to reduce insurance premiums. Normally, deductibles range from $ 50 to $ 250. However, there are larger deductibles, such as $ 1,000. These are used for “catastrophic coverage”, but the higher a deductible, the lower the insurance premium will be. The same goes for co-payments for PPO or POS insurance policies. Higher copayments will reduce the insurance premium. It is up to the employer to determine the best deductible and the best share for the employees and the company.

Lifetime medical coverage is the amount used to cover an employee over their lifetime with an insurance policy. The generally recommended amount is $ 1 million to cover serious health problems. The maximum personal expense limit is the maximum amount a person is expected to pay in a year for health expenses.

Many companies provide other forms of health care coverage for their employees, such as dental care or prescription drugs. These benefits dramatically improve employee morale and well-being, but each additional health benefit will increase the cost of the premium. If employees need additional benefits, it may be a good idea to increase the amount of insurance costs transferred to employees. The practice of passing some of the cost of insurance on to employees is a typical business practice that usually ends up saving money for both the company and the insured employees.

Small businesses can do more than provide health insurance for their employees. Educating employees about healthy lifestyle choices and encouraging healthy eating and activities will greatly improve the health of workers. Healthy workers can do more than help reduce premiums; their attitudes and productivity may also increase.