Best Employee Health Insurance Options for Small Businesses

November 17, 2017 - By 

These days, every business is struggling to provide for its hard-working employees. Businesses hit particularly hard are small businesses. That’s because they’re usually are new and aren’t as established as bigger businesses

In fact, 80% of businesses fail within their first year. Given this statistic, you may want to avoid providing employee health insurance.

It’s no exaggeration to say that health insurance prices have reached a ridiculous level. Economists project that in some states, health insurance will more than double next year.

Employees Are Worth The Extra Cost

It’s true providing employee health insurance will hit your business hard in the wallet. But before you dismiss the idea, consider how much you value your employees.

Without them, you’d be working every shift every day that your business is open. Plus, you’d be doing all the work–from customer service to accounting to clean-up–by yourself.

Now consider your outstanding employees, the ones who stay late to help out and come in when someone calls out sick. You want to keep employees like them because they go above and beyond to make sure the business operates smoothly.

High-quality workers will always be in-demand at every business. Those employees have the option between a job that provides a necessity such as health insurance and a job that does not. And they will almost always choose the job that provides health insurance.

Employee Health Insurance Options

Thankfully, you have numerous choices when it comes to providing employee health insurance. Insurance companies and brokers can provide you with more information on these and other choices. An example of a broker is Proactive Broker Network.

Individual Health Insurance

One option is to simply encourage your employees to buy their own plans. Almost every insurance company offers individual health insurance plans, including widely accepted names such as Anthem and United Health One.

The main problem with these plans is cost. Plans are organized by value tiers (bronze, silver, and gold), and the more valuable the plan, the higher the cost.

Age also plays a significant factor in individual healthcare insurance plan costs. Someone in their early twenties will pay a lot less than someone who is in their sixties. Insurance companies simply view older individuals as a higher risk for insurance.

If your employees are struggling to pay individual healthcare insurance costs, you can set up a health reimbursement arrangement (HRA). HRAs are convenient for small businesses because the group, not the policy, chooses how much will be reimbursed. As an employer, you can set up an HRA through your business’s healthcare provider’s online software.

Another individual healthcare insurance option is obtaining a plan through the Marketplace. Per the ACA, the Marketplace partially bases your premium on your income rather than your age. To qualify for lower premiums, though, your employees will need to submit paperwork proving their annual income.

The SHOP Marketplace

This employee health insurance option operates specifically with small businesses in mind.

Much like the individual Marketplace, the SHOP (Small Business Health Options) Marketplace offers group plans for businesses with 50 or fewer employees. Each plan requires the business to cover a certain percentage of its employees’ premiums.

To qualify for certain plans through the SHOP Marketplace, businesses may also need to meet specific requirements. One popular requirement is having a certain number of employees enrolled. Very small businesses may need to have all employees enrolled in order to be eligible.

For example, Massachusetts’s SHOP Marketplace requires employers to cover 50% or more of their employees’ premiums. Businesses with five or fewer employees must have all employees enrolled while businesses with six to 50 employees must have 75% of their employees enrolled.

Private Health Exchanges

Private health exchanges are a useful option for employers who have employees with very different needs.

Through a private health exchange, employers buy a set of plan options for their employees to choose from. These options are all group- or individual-based.

It might seem like a pain to have your employees choose their own plan without consulting you. But again, consider your valuable employees.

While many of your employees are likely healthy enough to consider a basic health plan, some may not be. What’s more, some may have immediate family members who rely on the employee health insurance you provide. Even though those employees may cost you more, they also earn you more, so it’s worth allowing them to pick a plan that suits their needs.

Additionally, if you let your employees pick their own health insurance plans, you can actually save money. You may have a few employees who choose more expensive plans, yes, but most will likely go with cheaper options. In this fashion, you can cover all your employees, even your more expensive ones.

Co-op Groups

With the cost of employee health insurance on the rise, co-op (Consumer-Operated and -Oriented Plan) insurance groups are becoming a popular option.

Co-op groups operate much like a traditional insurance company in that members pay a fee for access to cheaper healthcare. Some co-op groups have been known to charge members as little as $90 a month.

At the same time, you should be aware that that isn’t a standard cost for all co-op groups. The members of each co-op group decide what price they will charge every month.

Something else to be aware of when it comes to co-op groups is many don’t include hospital care access.

Private Small Group Insurance Plans

Perhaps the most expensive of all small business insurance options is private small group insurance.

Private small group insurance is the traditional method for providing health insurance to small business employees. Due to rising healthcare costs, though, it’s become a less attractive option.

One reason it remains on the table, though, is its simplicity. The other options all require a good deal of planning, discussion, and paperwork.

With private small group insurance plans, you simply choose a plan and offer it to all your employees. From there, you only need to keep track of who has enrolled and who hasn’t.

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