Offering health insurance can benefit you and your employees.
Health insurance has changed dramatically in the last few years, which means you'll have to consider various healthcare options.
It’s common practice for small businesses to include health insurance in an employee benefits package. And since group plans are generally cheaper than an individual policy, both you and your employees can be covered for less cost.
Remember, though, that there’s a significant difference between having your company shoulder the cost of a health plan and having your employees pay some of the premiums themselves. One alternative is to provide most of the cost of health plans for your employees, while making family coverage available, which workers can pay for themselves.
Choosing an Agent or Broker
Once you have a good idea of what your options are, you can choose an insurance professional to guide you through your insurance choices. If you haven’t used an agent or broker before, these suggestions may help you make a choice you’ll feel comfortable with.
- Get referrals from business colleagues, friends, and family.
- Make sure the agent is licensed by your state’s insurance department.
- Look for an agent who specializes in health insurance.
- Check on the agent’s experience.
- If the agent only represents one or two companies, you might want to keep looking for someone with a wider range of options.
- Find someone you feel comfortable with and who is easily accessible, since your agent or broker should be available to answer all your insurance questions.
If you’d prefer to allow your employees to choose from a list of medical providers, then managed care is often a good choice. There are three types of managed care: Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), and High Deductible Health Plans (HDHP).
If you choose an HMO for your company, you and your employees can pick medical providers from the HMO’s exclusive provider list. The more extensive the plan’s options for medical providers, the more you’ll end up paying to provide the plan.
Illustration: Cristi Cash
A PPO is similar to an HMO because employees pay less if they choose a doctor who is considered “preferred,” or included on the PPO’s preferred provider list. To get the preferred rate, your employees may have to go to their gatekeeper doctor, who will refer them to specialists if they’re in need of further attention. But if you offer a point-of-service plan, they may be able to go to the specialist directly. The amount of money you, as an employer, will pay for offering a PPO depends in part on what your employees’ copayment, or portion of the cost of a doctor or hospital visit, is. If your employees pay only $20 per visit, your costs will be higher because the cost to the employee is lower, but if your employees pay $30 or more, your costs will be lower. Deductibles also matter.
An HDHP has substantially higher deductibles than other plans, a list of preferred providers, and a maximum out-of-pocket cost for covered services. It’s often a less expensive option than other plans but has some drawbacks.
If you offer an HDHP that meets federal government guidelines, you can offer your employees the opportunity to contribute pretax income to a linked health savings account (HSA). You may want to match a portion of those contributions as well. Account holders can take tax-free withdrawals to pay eligible medical costs.
If you want your employees to have the flexibility to choose any doctor, or to consult a specialist without prior approval, a fee-for-service plan may be right for your company. The patient pays the full cost of care up to a certain amount, or deductible. Once the patient hits the deductible, the insurance company starts paying a percentage of the medical costs they approve, and the patient makes a copayment, up to a set limit, after which the insurer pays.
With this type of plan, your costs will be higher if your employees have a low deductible, and the charges approved by the insurer may be much lower than the actual medical cost.
When you are looking for a health plan, keep in mind that the costs change depending on how many people join the plan.
Your business is considered a small group if there are between 3 and 25 people (but sometimes up to 100) in the health insurance plan. Costs are generally higher for smaller plans.
If you want to save money on health insurance, you can join a small business coalition to help you get the most insurance for your money. For more information, you can contact the National Alliance Health home office at 202.775.9300 or go to their website, NationalAllianceHealth.org. You can also try the National Federation of Independent Business (NFIB) at 800.6342.669 or on their website at NFIB.com.
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