Small Business Health Insurance Options
Small business employers sometimes offer health benefits to attract and keep good employees. Many options are in place to help the small business employer choose the best health insurance plan for their employees and benefit their budget.
If you're a small business owner, here are several options to consider:
1. Managed Care Plans (HMOs)
The most common type of managed care plan is the Health Maintenance Organization (HMO). The main advantage to the small business owner is that premiums are less expensive. In addition, members usually pay less out of pocket expenses than traditional health insurance, like PPOs and POSs.
With HMOs members can't always visit a doctor or specialist of their choice. Instead they will visit their primary care physician chosen from an approved provider list and obtain a referral to see a specialist. While this system may seem limiting at times, it helps maintain a high-level of quality health care at a more affordable rate.
In addition, there's often little paperwork for HMO members to complete when they receive care since their health records are organized in large databases.
2. Preferred Provider Organizations (PPOs)
Preferred provider organizations or PPOs are organizations of health care providers who have contracted with insurance companies to provide health care. These groups of health care providers pre-negotiate all service costs with the insurance company to offer reduced rates to their members in return for access to a large member pool.
As a result, PPOs give their members the freedom to visit any doctor within their network, including specialists, without referrals from a primary care physician. Another perk: members typically have the option to visit physicians outside the network, but will usually have to pay more out-of-pocket expenses.
Premiums are usually higher with PPOs, but you may feel it's worth the expense for your employees.
3. Point of service plans (POSs)
POS plans combine the fundamentals of HMOs and PPOs where members use their primary care physician, but they then have the option to see a doctor or specialist without a referral from their primary care physician typically for a higher fee.
A POS plan may be more manageable for your small business health insurance budget since they're often intermediately priced. Be sure to compare services and premium pricing between PPOs, POSs and HMOs with your potential insurance companies.
4. Exclusive Provider Organizations (EPOs)
An exclusive provider organization or EPO is similar to a PPO but differs when a member receives care from a non-preferred provider; no coverage is provided and the member incurs all fees. These plans can be a little pricey since EPOs are much less common and the organizations are typically smaller.
5. Health Savings Accounts (HSAs)
With health savings accounts or HSAs, employees and/or employers can contribute funds to an account with pre-tax dollars. This may be advantageous in keeping your small business health insurance costs down because you can determine the amount to contribute based on your budget--especially if PPOs, POSs or HMOs aren't affordable.
HSAs can typically be used to cover routine medical expenses, preventative medicine and co-pays. Some accounts can be set up for dental insurance and vision care as well. Also, HSAs can be combined with insurance plans already in place. Be careful though, as some HSAs offer rollover options for unused funds where others may not.
While shopping for small business health insurance options be sure to inquire with potential health insurance carriers about how funds can be allocated and about their rollover policies.
6. Health Reimbursement Arrangements (HRAs)
Health Reimbursement Arrangements or HRAs allow employers to receive tax deductions for reimbursing employees for medical expenses. The employer reimburses claims on a per claim basis, pending approval, rather than making pre-paid deposits into an account.
Details typically vary between plans which allow for budget flexibility and service options. Services covered in these arrangements often include:
co-pays
medical
dental
vision
deductibles
One advantage to the employee is that HRA reimbursements are tax-free. In addition HRA funds may be combined with other insurance plans/options already in place. Be sure to research your tax regulations when shopping for HRAs.
7. State-subsidized Programs for Small Businesses
Other programs available are state-subsidized health insurance plans, which vary by state. The most common are "Premium Assistance" programs; their mission being to assist lower income families pay contributions sometimes involved in employer-sponsored coverage.
Some programs even enable combinations of employer-sponsored health insurance monies and public funds to satisfy portions of premium costs. Also, if you're a non-profit organization or a minority-run business, you may be eligible for subsidization.
Like many public-assistance programs, extensive paperwork and research may be involved. Be sure to check with potential health insurance carriers and state legislature to see how your small business health insurance premiums can be reduced through state-subsidized programs.
With all of these options available, and likely more, the task of learning about your different small business health insurance options may seem a little overwhelming. Consider putting together a list of questions before contacting potential insurance carriers--it may be a handy tool to have at your disposal.
To get small business health insurance quotes for your company, just enter your zip code in the box at the top of this page.
