What is small business health insurance?
Small business health insurance is health insurance that is available to companies of 2-50 people. Husband and wife teams are OK, as long as proper tax documentation is available.
Any compensated owner, officer, partner, or permanent employee who works for the company at least 25 hours per week may be eligible to enroll in a small business health insurance plan.
Anyone covered by a small business health insurance plan needs verifiable tax documentation, or the entire group's eligibility could be affected.
What are the benefits of small business health insurance?
In today's competitive marketplace, health insurance is important in recruiting and keeping talented employees.
Additionally, there are several insurance options available to help entrepreneurs select the right health plan. For example, trade associations often have insurance groups that
small companies can join. This is a convenient way for small businesses to cope with rising health insurance costs. More members means lower insurance premiums and more coverage,
so be sure to research association plans and insurance groups offered in your state.
Another benefit of providing health insurance to your employees is that doing so may qualify your business for health-care subsidies to small employers or minority-run businesses.
Also, you and your employees may be able to pay insurance premiums with pre-tax dollars. Contact your state health insurance office and your accountant to see if you qualify for
these opportunities.
Keeping employees healthy helps productivity, so investing in a good health insurance plan is usually the right decision for small business owners. However with the constant
rise of health care costs and insurance premiums, it is important to compare insurance plans to make sure you and your employees receive quality healthcare at a fair price.
What to avoid when purchasing small business health insurance.
Selecting the right health plan for your small business is important, so be sure to research all your options before making a decision.
It's not a good idea to pick an insurance plan based only on price. The least expensive plan might not provide the coverage you need, and the most expensive plan might offer
services that you don't want.
Failing to research the level of service the insurer will provide can lead to problems such as unpaid claims, excessive delays, and inaccurate service. One way to avoid lackluster
insurers is to ask doctors you're familiar with what they think about your potential insurance provider. If your doctor reports poor service and inefficiency, you may want to go
with a company that has a better track record.
Another thing to look out for is fraud. Don't hand over any funds until you've confirmed that the insurance company and the agent you're dealing with are licensed to do business
in your state. You can find this information from your state insurance department. You can also check company ratings with A.M. Best or other analysts. Try to go with an
insurance company that has an A- rating or better.
What are HSAs?
HSAs are Health Savings Accounts (formerly called MSAs: medical savings accounts) that enable employers or individuals to put
pre-tax dollars into specially designated
individual savings account for medical care.
Here's how HSA's work: Instead of paying high premiums, employers may choose to put part of the money into a health savings account while the remaining money is used to
purchase a high-deductable catastrophic insurance policy with a low premium.
The individual savings account owner then decides how to use the money in the HSA account. Funds remaining in the account at the end of the year can be rolled over or
withdrawn at retirement, like an IRA. Individually controlled funds differs from managed care, like HMO's, in that HSA's puts the responsibility of decision-making back onto the consumer.
People needing medical treatment are therefore more likely to make well-informed choices since the money paying for treatment comes out of their own HSA accounts.
What to avoid in HSA's.
HSA's have been criticized because some see HSA accounts as a way for the healthy and wealthy to take resources away from those who have high medical costs. But others view
HSA's as a way to give individuals more decision-making power over their health care. HSA's tend to make employees research their medical care options more thoroughly since
individuals are motivated to save money is their HSA accounts.
One major downfall is that
some HSA's do not rollover remaining funds to the following year. So while employees may see some tax benefits, they have to accurately predict
the amount they will spend on basic medical needs for the year, or else they lose what's left in the account.
Also, it is not advised to switch to an HSA if in the middle of ongoing medical treatments or if pregnant.
In researching HSA options the most important thing is make sure that the plan you choose meets your needs. After all, you've got to make sure the small business health insurance you choose
doesn't leave you or your employees shortchanged. And, remember if you do have employees, make sure your program meets all the requirements of the Employee Retirement Income Security Act (ERISA).
