If you own a small business that has no employees, you probably have not looked into any form of company-provided health insurance. Instead, you likely have your own policy through the exchange or have purchased an individual plan from an insurance carrier. However, if you are ready to grow your business and hire employees, you need to explore your insurance options. It can be exceedingly difficult to attract quality applicants if you don’t have a benefits package that at least includes health insurance. Let us look at the basics of small business insurance for employees and what it can do for your company.
How Does Small Business Health Insurance Work?
If you have never looked into health insurance for your business, there are a few things you need to know. It is different from purchasing individual health insurance. First, you do need to hire at least one employee. You cannot purchase business insurance for the owners. Typically, health insurance for small business owners is done as personal policies, not through the company. Note, however, that the qualifications can change from state to state and between different insurance companies. In some cases, you may need more employees to qualify, and in some areas, there may be a maximum number of employees you can have and still qualify for a small business insurance policy.
If you do have at least a single employee, you will want to shop around before selecting a policy. This part is remarkably similar to looking for your own personal health insurance. You will want to get quotes, look at what the policies cover, and determine if you want to offer just health insurance or some combination of health, vision, and dental.
There Are No Time Restrictions
It is important to note that you can look for small business insurance at any time of the year. There are no specific enrollment periods or other concerns. Also, your business will have to contribute something towards your employees’ premiums, and you have to offer health insurance to all your employees—you cannot pick and choose. All employees and their dependents who are eligible for coverage have the right to purchase the plan you offer. Typically, these are your full-time employees, though you can offer benefits to part-time or even long-term contractors if you want.
The Company Will (Usually) Need to Pay Half of the Premiums
How much a company must contribute is another factor that can change from state to state or by insurance providers. However, in most cases, the business will need to cover at least half of the premiums. There may be no rule about how much the company must contribute towards dependent premiums, though. You may also want to contribute more towards insurance as a way of retaining current employees and enticing new hires. Be sure you fully understand how much you will need to contribute when looking at different policies. This is the bulk of small business health insurance costs, and you do not want to commit to a play only to find that you cannot afford it.
In most cases, the premiums are locked for one year, so they will not change. You can add or drop coverage as needed as employees are hired or leave the company without affecting what you pay. You will renew your policy annually. As with individual insurance, the provider can change your rates and adjust what they cover at this time. You will need to determine if you want to renew or if it would be a better move financially to switch policies. However, do keep in mind what your employees need. Switching to a plan that costs them more money or eliminates coverage for services many of them use will not be popular.
Types of Small Business Insurance
Once you start looking at your options, you will find that plans typically fall into one of three distinct categories:
Health Maintenance Organizations or HMOs provide comprehensive coverage that is usually very affordable. These small business health insurance plans are designed to keep out-of-pocket costs for employees as low as possible. To do this, however, they normally limit what doctors’ employees can see. If an employee wants to see an out-of-network doctor, they will have to pay most or all the costs themselves.
Preferred Provider Organizations or PPOs expand on the in-network doctors and other care providers. Employees typically have more choices here because the networks are larger, which means they are more likely to find a provider they like who is covered by their insurance. However, the downside is that PPOs often have higher monthly premiums than HMOs. This means both you and your employees will have to pay more.
Point of Service Plans or POS plans is something of a combination of the two. This small business group health insurance option is priced in between HMOs and PPOs. The number of providers in a POS network, however, can vary depending on location. This can be a good option for business owners who need to carefully watch their budgets, but you do want to investigate the size of the provider’s network first. In some areas, the POS network may be as large as many PPO options. However, in other locations, it may be extremely limited.
Deciding on the Right Plan for Your Business
Now that you understand a little bit about small business health insurance, it’s time to look at your options and narrow them down. To determine the right health insurance policy for your company, you will first want to create a list of your needs. This list should include who you will provide coverage to, how much of the premium you can afford to pay every month, and what benefits your employees are looking for. You do have to be incredibly careful when talking to your employees about this—the law does not allow you to ask about their medical history. However, you can ask more broad questions, such as whether employees would value a plan with strong prescription coverage or one that offers a wide network of specialists.
Next, use this list to compare plans. Look at the monthly premiums, the in-network providers, the deductibles and copays, the prescription coverage, and whether there are any add-ons such as dental or vision policies. The main goal here is to primarily find a plan that offers what your employees want at a price you can afford. While getting the most for your money is important, you do want to make certain what you are getting is what your employees genuinely want and need.
Visit the Healthcare Marketplace
One resource to use when comparing coverage is healthcare.gov. When the Affordable Care Act went into effect, it created the online marketplace where individuals who do not receive health insurance from their employers can shop for policies. As a part of this, the ACA also created the Small Business Health Options Program or SHOP. SHOP is similar to the marketplace in that business owners can view various policies, learn about coverage options, and sign up for the plan that makes the most sense for them. This can be a good resource to use to learn more about insurance options, even if you don’t decide to purchase a plan through SHOP.
What Having a Great Small Business Insurance Plan Does for You
The insurance plan you select is going to have an impact on your business. The first major impact will be on the employees you currently have. They will have access to healthcare. Many may have not had insurance prior to this, while others may have been buying their own plans.
You will want to explain how buying into insurance will affect their paychecks—most will go down slightly because they will start paying in. However, your employees may be fine with this, especially if they did not have insurance before. Providing this benefit can go a long way in retaining these employees. Do be careful that you are offering insurance that your employees want and can afford. If your plan has high premiums but a small network or high deductibles, your employees may not be happy.
Next, by advertising that you offer health insurance as a benefit, you may see an increase in the quantity and quality of candidates who apply for open positions. Most people are looking for employer-provided insurance and will not apply for a job that does not offer this benefit. Again, many employees do look carefully at benefits such as insurance, so be sure your plan is competitive with what other companies offer.
In addition to remaining with your company instead of leaving for a job that offers insurance, your workers may also not be out as often. They will be healthier and able to get the medication they need if they do get sick. You will have a healthy, happy team that has access to everything they need to take care of themselves and their loved ones.
We Can Help
Ready to look for health insurance for small business owners and employees? J.C. Lewis Insurance Services is here to help. We will work with you to determine your needs and help you find the best plan that provides the care your employees need while still working within your budget. Contact us today to learn more.