Health Insurance Options for Small Businesses

• Health Insurance

Employees working in a company that employs fewer than 50 people are twice as likely to have no health insurance as employees working in a company with more than 50 people. Many small business owners feel that they don’t have the time or can’t afford the expense of health insurance. However, offering such benefits to your employees decreases turnover and increases job satisfaction, so it’s definitely worth some consideration.

Small businesses are eligible for what is known as ‘small group insurance’. Generally this refers to a group of between two and 50 employees. In most states small business owners have as many options for health insurance as do owners of much larger companies. In fact, in some states, such as Arizona, the law requires that insurance providers offer small businesses the same range of options for health insurance as they offer to large businesses.

Most major American health insurance providers offer a variety of options for small businesses, so that you can choose the type of health insurance that works for your business and for your employees. You have a great deal of flexibility in choosing a healthcare plan for your business, and in selecting optional extras such as disability, prescription plans, dental and vision coverall.

HMOs and PPOs

Most employers tend to choose either HMO or PPO plans. These are the most affordable types of health insurance for small business owners. The main drawback of these types of plans is that they are inflexible, and place certain restrictions on what types of healthcare providers policy owners can visit.

HMOs are the most restrictive of the two types of plan, as well as the cheapest. Under this type of plan, a policy owner must choose a primary care doctor who coordinates their healthcare, and the policy owner is covered only when they visit healthcare providers in the HMO network. PPO plans are a little more flexible, but are also more expensive. Under a PPO plan, users need not choose a primary care doctor. They may also visit non-network providers, but must pay some of the costs of doing so. In both cases, the insurance covers the full costs of all network visits.

POS and FFS Plans

Point of Service and Fee for Service plans are both more flexible plans that offer policy owners a high degree of choice in selecting healthcare providers. However, these plans are much more expensive, and typically involve high premiums, co-payments for doctor visits, or large deductibles. These are generally unpopular choices for small business owners.

HSAs and SDHPs

Health Savings Accounts are similar to Investment Retirement Accounts, in that the account is owned by the user, who can administer the account and even choose how to invest the funds it holds. These are increasingly popular with small and large businesses alike, as they allow account holders a high degree of flexibility and coverage for their healthcare. HSAs must be used in conjunction with a High-Deductible Health Plan.

A similar type of plan called a Self-Directed Health Plan is another increasingly popular way of managing healthcare. Users can choose to visit network providers for lower out-of-pocket costs, but have the option to select non-network providers if they wish. These plans are unique in that they focus on providing preventative care, and provide special benefits in the form of lower costs for preventative checkups and procedures such as vaccinations.