A major part of operating a successful business is making sure your workforce is healthy and able to carry out every task that needs to be completed. Health insurance plans are by far the best way to achieve this security.
As a business owner, the responsibility of ensuring every employee is properly covered falls on you. In fact, the Affordable Care Act requires businesses that employ 50 or more full-time employees to provide affordable health care to them. The law defines "affordable" as an insurance policy that doesn't require employees to spend more than 9.5% of their household income on health insurance premium costs.
To help you navigate the process of providing health insurance coverage to your employees, we will explore some of the health insurance options that are available to small businesses and break down everything from health insurance costs to the insurance companies you should consider for your health coverage.
How to Get Health Insurance for Your Small Business
Setting up a small business involves a wide range of tasks. And while obtaining health insurance may seem like an extra chore, it is worth noting that exploring small business health insurance options is not as daunting as it sounds. Below is an overview of some of the avenues you can pursue when looking for coverage options for your business:
- Individual coverage from the Marketplace: If you are the sole employee of your small business, you can simply obtain individual health insurance on the Healthcare.gov Marketplace. Individuals from certain locations benefit from eligibility for tax credits upon purchasing an individual plan.
- Private plans: Choosing a private plan makes you ineligible for a small business health care tax credit. With that being said, this option can provide you with flexible health care coverage that is tailored to your needs.
- Membership health plans: These are group health insurance plans that allow businesses that operate in the same industry to band together and buy into a group health insurance policy. Examples of industries where this health plan option is viable include plumbing, material handling, and wood manufacturing.
- Medicare: Under certain age and tax conditions, small business owners may be eligible for a Medicare health insurance plan.
What You Should Know Before Picking a Health Insurance Plan
To increase your chances of picking the ideal health insurance coverage for your business, you need to take several factors into consideration. Below is an in-depth look at what you should focus on when choosing a health insurance plan.
Types of Health Insurance Plans
There are several types of health insurance plans to choose from. These plans differ in terms of range coverage and the degree of flexibility they allow when selecting doctors and health centers in your area. Insurance companies use several acronyms and specialized terms for each of these plans. The following are the main types you will encounter when exploring your options:
- Health Maintenance Organization (HMO): This is the most affordable option for small business owners. HMO plans come with low premiums and deductibles. However, the choice of doctor is limited to physicians within the network.
- Point of Service (POS): A POS plan comes with slightly higher premiums than an HMO. But unlike the latter, out-of-network doctors are covered by the plan.
- Exclusive Provider Organization (EPO): Like an HMO, EPO plans exclusively cover in-network doctors. The main difference between the two is that EPO networks are significantly larger and offer more options than HMOs. Their premiums are also higher.
- Preferred Provider Organization (PPO): This is the most comprehensive and priciest health insurance plan. PPOs cover out-of-network doctors and don't require a primary care physician referral before seeing a specialist.
Policy Categories
Another thing you should pay attention to is the policy categories that health insurance providers use. Most companies use "metal" categories to classify their insurance policies. The most commonly used ones are Bronze, Silver, Gold, and Platinum — the level of care and coverage increases as you go up the category tier.
Enrollment Period
The national health insurance open enrollment period for major medical coverage starts in November and concludes in mid-December. While some insurance companies can extend this period in certain extenuating circumstances, it is best to get in at the right time to avoid the risk of having to wait for the next enrollment period.
Choosing a Health Insurance Provider for Your Small Business
Now that you are familiar with some of the basics of health insurance for small businesses, it is time to discuss some of the options you should consider when shopping for health coverage. Here are some of the top providers for small business owners:
- Blue Cross Blue Shield: This is one of the largest and most trusted providers in the country. They boast a wide provider network and offer a host of data-driven health care solutions to small business owners.
- UnitedHealthcare: This provider covers over 45 million individuals and counts more than 1.3 million health care providers in its network. UnitedHealthcare is noted for allocating a lot of resources to technology and innovation.
- Humana: This health insurance company offers group coverage in 18 states. Humana has five different plans for businesses and boasts excellent customer service.
- Aetna: Founded in 1863, Aetna is one of the oldest insurance providers in the business. The company provides health expense fund options that offer employees many tax-saving benefits.
How Much Does Health Insurance Cost Your Small Business?
As a small business owner, health care costs are something you should be concerned with. As you would expect, the cost of health coverage varies depending on a wide range of factors. Variables like the age of the employees, the type of plan and provider network you opt for, and how you handle out-of-pocket medical expenses will affect the overall cost of health insurance. To get an idea of what to expect when it comes to health insurance costs, check out this employer-sponsored insurance survey conducted by the Kaiser Family Foundation.
It is also worth reiterating that small businesses are eligible for certain tax benefits that could offset some of the costs associated with the health insurance policy. In fact, businesses that qualify for the Small Business Health Care Tax Credit will get a percentage of their monthly premium costs covered by the government. To qualify, your small business has to satisfy the following criteria:
- You employ fewer than 25 full-time employees
- The average salary of your employees cannot exceed $50,000 annually
- You cover at least 50% of your employees' premiums
- You provide SHOP coverage to your full-time employees
Keep in mind that your small business may be eligible for an even larger tax credit. For instance, if you employ less than 10 full-time employees at an average annual salary that doesn't exceed $25,000, you will qualify for the full 50% tax credit.
Let Skynova Help Streamline Your Business Finances
One of the most challenging and time-consuming tasks associated with running a business is managing business finances. In fact, it is not uncommon for small business owners to spend most of their time dealing with this side of the business while completely neglecting the revenue-generating tasks that could boost their bottom line.
Luckily for you, Skynova offers a convenient solution to this challenging problem. Skynova accounting software is an all-in-one tool that allows you to track income and expenses in one place and generate accurate financial reports with the click of a button.
Notice to the Reader
The content within this article is meant to be used as general guidelines and may not apply to your specific situation. Always consult with an insurance expert to make sure that you are providing adequate health care coverage to your employees.