As a small business owner in California or Arizona, providing quality healthcare for your employees can be a major expense, but it’s also one of the most important investments you’ll make in your team. With rising healthcare costs, maximizing your healthcare dollar while ensuring your employees have access to essential care is key.
One article noted, for example,
“According to the 2022 Kaiser Family Foundation Employer Health Benefits Survey, individual coverage premiums rose 58 percent, from an average of $5,049 annually in 2010 to $7,911 in 2022. Over the same period, family coverage premiums rose more than 63 percent, from $13,770 to $22,463.”
Those costs have since gone up and continue to increase. Advisory.com pointed out in July 2024 that,
“In 2025, commercial healthcare costs for the group market are expected to grow by 8%, which matches the 2023 estimate and is the highest projected increase since 2012. For the individual market, healthcare costs are expected to grow by 7.5%.”
In this brief guide, we’ll walk you through the essential factors to consider when selecting a healthcare plan for your employees to help you make the most of your budget without sacrificing quality.
Assess Your Business Needs
Before diving into the world of healthcare plans, it’s important to start with an internal assessment. Begin by asking yourself a few critical questions:
- How many employees do you need coverage for?
- What are their healthcare needs based on age, health status, and family size?
- Is your workforce concentrated in a single area, or do you have employees scattered across regions?
Small businesses in California and Arizona often face different challenges. For instance, tech startups in California may have a younger workforce with an emphasis on preventative care, while agricultural businesses in Arizona may prioritize coverage for physical injuries and other job-related risks.
Understanding the needs of your employees will help you tailor your options. Some plans may provide better access to specialists, while others may focus more on preventative care or emergency services.
Compare Coverage Options: HMO, PPO, And EPO Plans
Healthcare plans generally fall into three main categories: Health Maintenance Organization (HMO), Preferred Provider Organization (PPO), and Exclusive Provider Organization (EPO). Each of these plans offers different levels of coverage, costs, and flexibility.
- HMO Plans: These are often the most affordable, but they limit your employees to a network of healthcare providers. Primary care physicians (PCPs) act as gatekeepers, and referrals are needed for specialists. HMOs are ideal for businesses that want to lower costs while providing basic healthcare services, but they can be restrictive in terms of provider choices.
- PPO Plans: These plans are more flexible, allowing employees to visit both in-network and out-of-network providers. PPOs are ideal for businesses where employees might need to see specialists more frequently or live in areas with limited healthcare options. However, this flexibility usually comes with higher premiums.
- EPO Plans: EPOs combine aspects of both HMOs and PPOs. Like HMOs, they require employees to stay within a network, but like PPOs, they don’t require referrals to see specialists. These plans are a good balance between cost and flexibility.
In both California and Arizona, regional differences can play a role in plan availability. It’s important to compare networks carefully, especially in rural areas where provider options may be more limited.
Factor In Premiums Vs. Out-Of-Pocket Costs
When selecting a healthcare plan, it’s crucial to understand the relationship between premiums (the fixed monthly costs you pay) and out-of-pocket expenses (like deductibles, co-pays, and coinsurance).
Simply put, healthcare premiums are a monthly cost to have health insurance coverage, while out-of-pocket costs are what you pay for healthcare services when you need them.
Generally, lower premiums are associated with higher deductibles, and higher premiums are associated with lower deductibles. While it may be tempting to choose a plan with lower premiums to save money upfront, those savings may disappear if employees face higher out-of-pocket expenses when accessing healthcare.
Plans with lower premiums often do have higher deductibles, meaning employees will need to cover a larger portion of their healthcare costs before insurance kicks in. On the other hand, plans with higher premiums may offer better coverage, lower deductibles, and reduced out-of-pocket costs.
The key is to balance monthly premiums with potential healthcare usage. If your employees are generally healthy and use minimal medical services, a high-deductible plan with lower premiums may work. However, if you have employees with chronic conditions or regular healthcare needs, it may be worth investing in a plan with lower out-of-pocket expenses.
Investigate Networks And Access To Care
One of the most important factors when selecting a healthcare plan is ensuring that your employees have access to a broad network of healthcare providers. This is especially crucial in states like California and Arizona, where regional healthcare availability can vary significantly.
For example, employees in urban centers like Los Angeles or Phoenix may have access to a wide range of in-network providers, while those in more rural areas may have fewer options. It’s important to verify that the plan you choose includes providers your employees can easily access.
Choosing a plan with a robust network not only ensures employees get the care they need, but it can also help with retention. Employees who can access their preferred doctors and specialists are likely to be more satisfied with their healthcare benefits.
Explore Preventative And Wellness Benefits
Preventative care is an essential part of any healthcare plan. Not only does it help employees maintain their health, but it also saves businesses money by reducing the need for expensive treatments later on.
Look for plans that offer comprehensive preventative services, such as:
- Annual physicals
- Vaccinations
- Screenings for conditions like diabetes and high blood pressure
- Mental health services
Many plans also offer wellness programs that promote healthy lifestyles, such as smoking cessation programs, weight management resources, and fitness incentives. These services can reduce absenteeism and increase productivity, which is particularly important in fast-paced industries like tech or physically demanding jobs in construction or agriculture.
In both California and Arizona, there’s growing support for preventative healthcare measures, and many plans reflect this by including wellness benefits at no additional cost.
Consider Compliance With State And Federal Laws
Healthcare laws can vary between states, and it’s essential to ensure your plan complies with both federal and state regulations. For example, California operates Covered California, a state-specific healthcare marketplace that offers unique plan options and benefits not available in other states.
Similarly, Arizona has its own regulatory environment, and business owners need to understand the differences in requirements. All small businesses are also required to meet the mandates of the Affordable Care Act (ACA), which dictates that businesses with over 50 employees must provide health insurance that meets certain standards.
Working with a broker familiar with state-specific laws will help ensure compliance and avoid costly penalties.
Leverage Tax Credits And Incentives
Small business owners in California and Arizona may be eligible for tax credits through the Small Business Health Options Program (SHOP). These credits are available to businesses that offer healthcare coverage to their employees and meet certain requirements, such as having fewer than 25 full-time employees and offering coverage that meets ACA standards.
In addition to tax credits, providing healthcare benefits can help reduce other expenses, such as employee turnover. Offering quality healthcare benefits is a valuable tool for attracting and retaining talent, which can ultimately lower recruitment costs.
Review Plan Customization Options
Finally, some insurers offer customizable plans that allow you to tailor coverage to your specific business needs. For example, you may be able to offer basic coverage to entry-level employees and more comprehensive options for executives or those in higher-risk roles.
This flexibility is particularly useful for small business owners in diverse industries. By customizing your plan, you can provide coverage that aligns with your budget while meeting the needs of your entire workforce.
Maximize Your Healthcare Investment For Long-Term Success
Selecting the right healthcare plan for your small business in California or Arizona doesn’t have to be overwhelming. By assessing your business’s needs, comparing coverage options, and taking advantage of tax credits and wellness programs, you can provide excellent healthcare benefits while staying within budget. Consulting with an experienced insurance broker will ensure you make informed decisions that support your employees and your bottom line.
J.C. Lewis Insurance Services: Simplifying Health Coverage For Small Business Owners
At J.C. Lewis Insurance Services, we offer California and Arizona health plans from leading, licensed providers, ensuring you have access to top-notch coverage for your small business. With our extensive licenses and certifications, we’re equipped to help small group employers find the right health benefit solutions.
We understand that managing employee health insurance can be challenging, but our team is here to simplify the process. From initial setup to renewals and beyond, J.C. Lewis Insurance Services offers full support every step of the way, so you can focus on running your business.
In addition, we provide guidance for seniors looking for Medicare supplemental and prescription drug plans.
Whether you need help with Small Group Insurance (1-50 Employees), navigating the Small Business Health Options Program (SHOP), or tackling any other employer insurance concerns, you can rely on us to provide expert advice and personalized solutions.
Your well-being is our top priority, and we are committed to helping you find the ideal coverage to meet your needs. So, contact us today and learn more about selecting the best plan for your company.