Small Business Health Insurance Can Be Affordable
Health insurance is one of a company's most important benefits to its employees. A good health insurance plan that balances quality and cost can help you attract and retain qualified employees. However, many small employers do not offer health insurance. Although high premium costs are often a major concern, they need not prevent you from insuring your employees. In today's world, with managed care and the trend toward increased cost sharing with employees, health insurance is no longer an "all or nothing" proposition.
If this is the first time you decide to offer health benefits, begin by meeting with your employees to discuss their needs. You may want to make it clear, up-front, that you may be unable to afford to meet all their needs and that they may have to share in the cost. But, by getting their input, you may be able to find an insurance plan that is appropriate for both your business and your employees.
Research Your Options
There are three types of health insurance plans:
- Managed Care Plans: These plans generally restrict care to or offer financial incentives for using certain medical care providers and hospitals. Providers agree to limit their fees in exchange for a guaranteed number of patients. Providers generally handle all claims administration. Health maintenance organizations (HMOs) and preferred provider organizations (PPOs) are examples of managed care plans. HMOs typically provide little, if any, coverage for services by medical professionals outside the organization. PPOs pay for out-of-network services, but reimbursement rates are lower than for in-network providers.
- Indemnity (or Fee-for-Service) Plans: These are the traditional health insurance plans. After paying a deductible, employees pay a percentage of the cost of health care services. Once the employee has spent a maximum out-of-pocket amount, the plan normally picks up 100% of all further costs. One advantage of indemnity plans is that employees can choose any doctor or hospital. Employees generally file their own claims for reimbursement. Some indemnity plans include cost-control features, such as pre-admission reviews of hospital stays, higher deductibles, and higher co-pays.
- Self-Insurance Plans: Some businesses fund their own health insurance plans and contract with a third-party administrator to process the claims. This option may be appropriate for large companies with significant financial resources.
The Bottom Line
Choosing a health care plan for your business will likely take time and effort to research options. It is a big financial commitment, but the benefits of employee attraction and retention often outweigh the cost. If you still have questions, check out the recorded presentation, Health Insurance For Your Small Business, or consult your advisor to discuss the decision, weigh the choices, and create a plan.