Small business owners and their employees can benefit from quality and affordable group health plans. But before an employer makes a final decision on small business health insurance coverage, comparing plans and options is a must.
The question then, is how to evaluate the cost and coverage of different business health insurance options effectively?
The fact is that, when it comes to small business health care and health insurance coverage, there are multiple options and choices. And there are various considerations including whether small businesses should offer health reimbursement arrangements in lieu of a standard group health insurance plan.
So, how can an owner or manager best evaluate small business health options?
FACTORS IN MAKING THE BEST BUSINESS HEALTH INSURANCE DECISIONS
For most small business owners, the primary concern is going to be cost. For their employees, a major consideration is likely to be coverage. Depending on where your business is located, your state will have either a state-run health exchange or make us of the federally run exchange.
This is important since employees, including full time equivalent employees, are not required to make use of employer-sponsored health employee’s health care. They can, in fact, opt to purchase their own insurance independent of their employer directly from a health insurance company or through the federal or state exchange.
Keep in mind, too, that the Affordable Care Act (ACA) established that businesses with at least 50 employees must provide some level of health insurance. If not, these businesses are subject to penalties. Those small businesses with less than 50 full time employees are not required to offer health coverage options.
However, a vast majority of smaller businesses do offer health insurance benefits to their workers and carry some of the cost of those benefits.
And what are those costs typically?
EVALUATING EMPLOYER COSTS FOR EMPLOYEE HEALTH COVERAGE
According to data from Kaiser Family Foundation’s 2021 Employer Health Benefits Survey, the average cost for small business owners is $547 per employee per month and $1,175 for family coverage per month.
What this means is that, in 2021, if an employer had 25 full time equivalent (FTE) employees and 10 of them covered themselves and their families while the remaining 15 opted to participate for themselves only, the employer contributed approximately $20,000 per month.
While out-of-pocket costs that include deductibles, co-insurance, and out-of-pocket maximums only impact employees, their monthly premiums is what employees pay to have coverage. And, although a portion of this usually gets deducted from their paychecks, their employers typically pay most of the premiums. Consequently, business owners will want to calculate in advance how much any particular health coverage option will cost them and their employees.
While business owners, too, can purchase small group coverage directly from insurance providers or through an agent or broker, many find that their costs can be less if they go through the Small Business Health Options Program, or SHOP.
In addition, according to HealthCare.gov, purchasing insurance through the Small Business Health Options Program (SHOP) is generally the only way small businesses can qualify for a business health care tax credit.
Employers have two options for enrolling in SHOP insurance which are through an insurance company or with the assistance of a SHOP-registered agent or broker
One beneficial approach to evaluating the costs of business health insurance is to work with an experienced broker that understands small business and group health insurance plans.
WHY COVERAGE IS IMPORTANT WHEN EVALUATING BUSINESS HEALTH INSURANCE
Offering health care coverage for employees can be beneficial to employers in several ways aside from tax credits and deductions. However, choosing the best offerings for the best price is what most employers are hoping to accomplish when it comes to health insurance.
And part of the evaluating business health insurance work that should be done is determining which plans (and carriers) have the best coverage, or provider networks, for your employees.
“Major health insurance companies contract with providers and medical facilities like hospitals. These contracts decide how much providers get paid and may set requirements for providers, such as requiring that they meet a minimum quality of care. A small network could result in employees needing to search for a doctor and lead to extra out-of-network costs.“
Many insurance providers only offer services in certain states. And those that are considered national companies often have limited coverage in various regions.
In addition, “coverage” can also include the range of services covered by a plan option. In other words, evaluate the healthcare services provided for in addition to the basics that most all plans cover.
HealthCoverageGuide.org, for example, points out that these questions should be answered when evaluating coverage,
What services does the plan cover? You’ll want to make sure the plan benefits include the services most important to you and your employees. (Also keep in mind that, typically, the more that’s covered, the more the plan will cost.)
What physicians and hospitals can participants use? Managed care plans typically limit participants to a network of providers and charge more if participants visit providers outside the network.
In addition to the issues of cost and coverage, offering health coverage options entails knowing what types of plans are available and which ones best fit the needs of a business’s employees. Because the details of any plan will vary depending on the type – and from provider to provider – it is often in the best interest of a business owner to consult with a reputable insurance agent or broker before finalizing a business health insurance offering.
J.C. LEWIS INSURANCE SERVICES AND YOUR BUSINESS HEALTH INSURANCE
J.C. Lewis Insurance Services specializes in helping businesses with small group health insurance.
With more than 50 years of experience and offering only the best health insurance plans, we are more than capable of helping your evaluate your health insurance options. At J.C. Lewis Insurance Services, we only work with the top health insurance carriers that are licensed to do business in the states that we operate in.
A small business ourselves, we are a family-owned and operated health insurance agency located in beautiful Santa Rosa, California. Having worked as a small business for almost five decades now, we understand the unique needs and challenges small business owners face. In addition to being specialists in finding and managing medical insurance plans for small businesses, we are also licensed and certified by each insurance carrier we represent.
So, whether you’re considering small group health insurance for you and your employees or you’re simply looking to make changes to your existing plan, we welcome your questions and look forward to addressing your concerns.
J.C. Lewis – make us your preferred partner to help you make the right decision and find the right solution for your health coverage needs.
Frequently Asked Questions
What are the key considerations when evaluating insurance for small businesses?
When assessing small business health insurance options, several factors come into play. Primarily, cost and coverage take precedence. For business owners, the aim is often to strike a balance between affordability and comprehensive coverage. Additionally, understanding the requirements imposed by the Affordable Care Act (ACA) is crucial, especially for businesses with 50 or more employees.
How much does insurance typically cost for small businesses?
According to the Kaiser Family Foundation’s 2021 Employer Health Benefits Survey, the average monthly cost per employee for small business health insurance is approximately $547, with family coverage averaging around $1,175 per month. However, these costs can vary based on factors such as location, number of employees, and chosen coverage options.
What are the advantages of purchasing insurance through the Small Business Health Options Program (SHOP)?
Opting for coverage through the SHOP marketplace can offer several benefits for small businesses. Not only can it potentially lower costs compared to direct purchases from insurers, but it may also make businesses eligible for health care tax credits. Furthermore, SHOP provides access to a range of health plans, allowing businesses to find the right fit for their employees’ needs.
Why is coverage important when evaluating insurance for small businesses?
Coverage plays a crucial role in determining the effectiveness of a health insurance plan for employees. Beyond meeting legal requirements and potentially qualifying for tax incentives, comprehensive coverage ensures that employees have access to the medical services they need without facing significant out-of-pocket expenses. It’s essential to consider both the breadth of coverage and the network of providers when evaluating options.
What factors should be considered when assessing the quality of coverage in insurance for small businesses?
Evaluating the quality of coverage involves examining several key aspects. Firstly, businesses should assess the network of healthcare providers included in the plan to ensure accessibility for employees. Additionally, considering the range of services covered and any limitations or exclusions is essential. It’s also important to review the reputation and reliability of the insurance provider to ensure prompt and efficient claims processing.
How can small business owners effectively compare insurance options?
Small business owners can streamline the process of comparing health insurance options by working with experienced brokers or agents who specialize in group health plans. These professionals can provide valuable insights into the various options available, helping business owners assess costs, coverage, and provider networks to make informed decisions that align with their budget and employee needs.
What are the potential penalties for small businesses that do not offer insurance to employees?
Under the Affordable Care Act (ACA), businesses with 50 or more full-time equivalent employees may face penalties if they fail to provide health insurance coverage. These penalties can vary depending on factors such as the number of employees and the duration of non-compliance. It’s essential for businesses to understand their obligations under the ACA to avoid potential financial repercussions.
How can small business owners determine the best insurance options for their employees' needs?
Identifying the most suitable health insurance options for employees requires careful consideration of their healthcare needs and preferences. Small business owners should solicit feedback from employees regarding their coverage preferences and consider factors such as demographics, existing health conditions, and anticipated healthcare expenses. Tailoring the available options to meet the diverse needs of employees can lead to higher satisfaction and retention rates.
What role do insurance brokers play in assisting small businesses with insurance decisions?
Insurance brokers serve as valuable partners for small businesses navigating the complexities of health insurance. These professionals possess in-depth knowledge of the insurance market and can help businesses assess their needs, compare options, and negotiate favorable terms with insurers. By leveraging the expertise of insurance brokers, small businesses can optimize their health insurance offerings and ensure comprehensive coverage for employees.
How does J.C. Lewis Insurance Services support small businesses in selecting insurance plans?
J.C. Lewis Insurance Services specializes in assisting small businesses with their health insurance needs, offering personalized guidance and access to top-rated insurance carriers. With over 50 years of experience, our team understands the unique challenges faced by small businesses and works tirelessly to identify cost-effective solutions tailored to their requirements. By partnering with J.C. Lewis Insurance Services, small businesses can navigate the complexities of health insurance with confidence and secure comprehensive coverage for their employees.
