Guide to Small Business Health Insurance Group Options

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For most businesses, having the staff covered with a health insurance plan is an important decision for both parties. While business owners will have greater opportunities to attract candidates and expand their businesses, employees are left with fewer concerns about their general well-being.

As a result, providing medical coverage is probably one of the best things employers do for their employees and companies. However, navigating and shopping for small business group health insurance can sometimes get confusing as there are many options and rules to sort out.

Continue reading for our comprehensive guide on successfully buying the most suitable health plan for your staff and yourself.

RELATED: Best Way To Find Affordable Health Insurance Guide

 

Health Insurance 101

Health insurance is an insurance product that allows the insured to access and receive care from a network of selected healthcare providers. Functionally, it can directly reimburse the insured or pay the care providers a percentage of the medical and surgical expenses incurred in the event of injury or critical illness.

When carrying a health insurance plan, policyholders must pay a predetermined monthly premium in exchange for protection when catastrophic medical bills come up. Legally, they are entitled to ten essential health benefits, including:

  • Preventive Care
  • Ambulatory Patient Services
  • Emergency Services
  • Hospitalization
  • Maternity Care
  • Prescription Drugs
  • Lab Tests
  • Mental Health and Substance Abuse Services
  • Rehab Services
  • Pediatric Services

 

What is Small Business Group Health Insurance?

As an extension of the standard health insurance, employers purposely purchase small business group health insurance to provide benefits and medical protection for their employees.

Generally, this type of health insurance is referred to as an “employer-based health insurance plan” or a “group plan.”

In some cases, spouses and children of the employees, named as dependents, can also be included in the plan.

 

How Small Business Group Health Insurance Works

Since small business health insurance is a type of corporate health insurance, the owner and employees usually share the cost of the monthly premiums.

Generally, the employer must contribute at least half of the premiums (50%). Still, their premium shares may vary depending on their location and the insurance company’s policy. Employees’ premium contributions can be made with pre-tax dollars, leading to reductions in their taxable income.

Businesses or organizations with more than 50 employees are federally required to offer health insurance coverage for their employees. However, whether a business is eligible to obtain health insurance largely depends on each state’s law and insurance guidelines.

Essentially, companies with fewer than 50 full-time employees are qualified for a type of health insurance called the Small Business Health Options Program (SHOP). It is offered mainly by private insurance brokers with minimal participation requirements.

Most importantly, all employees and dependents have little to no chances of being turned down due to their medical condition with this type of corporate health insurance.

 

The Benefits of Small Business Health Insurance

couple-having-breakfast-The-Benefits-of-Small-Business-Health-Insurance-ss-body

In addition to supporting the well-being of the staff, group health insurance can bring a wealth of perks to the owner.

Some of the advantages of providing health insurance for your team are:

  • Lower Premium Costs: Group health insurance often costs less and offers more extensive coverage than individual health insurance despite the impact of the number of employees.
  • Tax Advantages: When filing federal business taxes, employers are allowed to deduct the monthly premium contributed on behalf of their employees.
  • Saving Opportunities: Enrolling in group health insurance alongside the staff can be more cost-effective than purchasing individual health insurance.
  • Recruiting Success: Often, offering health insurance is an excellent way to attract and retain talent. It is one of the most critical factors influencing candidates’ final decisions when accepting a potential job offer. Simultaneously, it is also a non-verbal way to let employees know they are valued.
  • Accessibility: Obtaining health insurance can be challenging due to high premium prices, numerous requirements, and complex underwriting processes. With employer-based health insurance, access to high-quality healthcare is no longer out of reach for many individuals, strengthening the relationship between employers and workers.
  • Increased Productivity: Employees with comprehensive health insurance benefits are generally more satisfied with their jobs due to paid sick leaves and covered medical expenses, enabling them to deliver their peak performance at work.

 

RELATED: 6 Things To Understand When Picking The Best Health Insurance Plan

 

Types of Health Insurance for Small Businesses

Aside from SHOP, there are many types of health insurance for small business owners seeking the most comprehensive health insurance to insure their staff. The following are some of the most common options:

 

Health Reimbursement Arrangement (HRA)

A health reimbursement arrangement is set up and funded by employers. Employees can request and receive tax-free money to pay for qualified healthcare expenses and even premiums when needed. Some of the most common HRA plans include:

 

Health Saving Account (HSA)

A health savings account is a type of personal savings fund that allows both parties (employers and employees) to use pre-tax money as contributions to the account for current and future medical expenses.

The contributions are not subject to federal income tax. They are available for spouses and dependents as long as they are used for relevant medical costs, such as acupuncture, ambulance costs, hearing aids, and qualified long-term care services, to name a few.

It’s important to note that an HSA is only available for people covered by specific high deductible health plans (HDHPs). Moreover, the money you put in the HSA doesn’t expire.

 

Association Health Plan (AHP)

For decades, this type of health plan has served as an effective tool that helps small-sized businesses (under 50 full-time employees) or groups of people sharing the same profession gain access to healthcare services at the same prices as large corporations.

 

In-Network Health Insurance (HMO, EPO, POS)

In-network health insurance is a term to describe networks of doctors and physicians that have agreements with insurance companies to provide affordable medical care.

As a result, those who opt for such health insurance plans must visit their selected in-network healthcare providers to keep the costs as low as possible.

Some of the most common in-network health insurance models are:

 

How to Shop for Small Business Health Insurance

First, employers should ask themselves the following questions before buying health insurance coverage for their businesses. These questions do an excellent job of helping employers narrow down hundreds if not thousands of policies available on the market.

  • What level of coverage does my team need based on their medical profile and needs? Generally, three broad tiers of coverage are available to small businesses, such as bronze, silver, and gold/platinum plans.
  • What is my business size? You will likely receive a price markdown if you have more than 50 employees. Otherwise, other alternatives mentioned above can be as effective as the ones offered for large-sized companies.
  • How much should I spend on health insurance benefits? For the most part, employers should cover enough premium costs to keep the employees’ shares affordable while also providing appropriate benefits and coverage levels.
  • What type of healthcare network does my team want? Each healthcare network significantly impacts the premiums and coverage levels alongside advantages and drawbacks. It’s crucial to do your research to better understand your employees’ medical needs before making the purchase.

 

How to Qualify for Small Business Health Insurance

Although the qualifications may vary from one insurance company to another, most insurance carriers will look into three factors to evaluate and decide whether a company is eligible for small business health insurance coverage. These are:

  • Business registration at the home state
  • At least two full-time employees working at the company
  • Payroll history records and tax/ownership documents

 

If you have questions about small business group health insurance, please get in touch with us to receive a free consultation.

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