Cheap Group Health Insurance Small Business
Monday, December 20, 2021 15:36 Posted by Admin
While starting up your own business can be a massive undertaking in and of itself, it’s important not to neglect securing the best group health insurance plan for you and your employees. In fact, while not legally required for all businesses, offering health insurance coverage to your employees is crucial to the success of your small business. With so many options to choose from, a ton of questions, and most likely just yourself, instead of a full human resources department to help, it’s reasonable to be slightly overwhelmed when shopping around for group health insurance.
In addition to finding coverage that fits the needs of both your employees and your business as a whole, you also want to choose a plan that that is affordable and fits your budget. With that said, continue reading to learn more about how small business group health insurance works, the various types, how much it costs on average, and how to find cheap group health insurance for you small business.
How Does Small Business Health Insurance Work?
As the owner of a small business, there are four main factors that you must be aware of in order to understand how small business group health insurance works. These include number of employees, coverage, employee monthly premiums, and finding the right coverage.
- Number of employees: For a small business to qualify for small group health insurance, it must have at least one full-time or full-time equivalent employee. In most states, this employee cannot be the business owner or employer or a spouse of the business owner or employer. The maximum number of employees that a business must have to purchase coverage through the small group market varies based on state, but is usually 50 or 100.
- Coverage: If you are eligible for a small business group health plan, the coverage is typically guaranteed to come from the insurance company. What this means is that neither you, nor your employees, nor your and their dependents, can be denied coverage because of a pre-existing medical condition. This also indicates that all qualified employees and their dependents can enroll in a new plan and obtain coverage, irrespective of their current medical condition.
- Employee monthly premiums: As a small business owner, you are required to pay at least 50% of employee monthly premiums. However, this minimum percentage can differ based on the insurance company you select and/or the state you reside in.
- Finding coverage: Small businesses owners are permitted to shop around for health insurance coverage whenever desired, and do not have to wait for an open enrollment period or for the current health plan to expire. Though, once you select and purchase a specific plan, you are usually committed to that plan for at least a year. During this year, however, you are allowed to remove and add coverage for former and new employees and their dependents. Then, once the year is up, you have the option to renew the current plan or choose a new one.
How Much Does Small Business Group Health Insurance Cost?
Irrefutably, it can be rather expensive to start up a business. Because of this, it’s common for small business owners to postpone the idea of offering health insurance to their employees, simply to stay within their allotted budget. However, as previously mentioned, health insurance is crucial to the success of your small business. So, what exactly can employers expect to pay for small business group health insurance?
Since there are so many health insurance options available for small businesses to choose from and each business is unique, it can be difficult to estimate what the costs will be. However, according to a report completed by the Kaiser Family Foundation (KFF) in 2020, the average annual premium for small businesses was $7,483 per full-time employee. Employers contributed about 84% of this premium, with employees were left to fund the outstanding 16%.
Group Health Insurance Types for Small Businesses
When it comes to the types of group health insurance plans, small businesses can choose from the following four key options:
- HMO (health maintenance organization) plans: For those looking to find the cheap group health insurance for their small business, an HMO plan is likely your best bet. Of all the types, HMO plans tend to be the cheapest. They offer a wide array of services through a network of providers that are contracted exclusively with the HMO, or agree to provide their services to members of the plan. In most cases, employees that are on choose this plan have to pick a primary care physician (PCP) who will manage their care. If needed, the employee’s PCP will refer them to a specialist. While these plans are affordable, they only allow covered employees to pick doctors and facilities that are part of the network.
- PPO (preferred provider organization) plans: PPO plans are the most common form of health insurance, giving members the choice between both in-network and out-of-network physicians and hospitals. Though, if the employee chooses an in-network provider, the insurance company will be responsible for a bigger percentage of the claim and, thus, be more affordable for the employee.
- HSA-qualified plans: These types of plans refer to PPO plans that are specially designed to be matched with a health savings account (HSA). HSAs are basically bank accounts that allow employees to set aside pre-tax money to fund their future medical expenses. In order to be eligible for an HSA, participants must be enrolled in a high deductible health plan (HDHP).
- Indemnity plans: With indemnity plans, members have more control over their healthcare. They are permitted to visit any physician or facility they choose. The insurance company is responsible for a fixed amount of the total medical bills. However, employees may end up having to pay for some services upfront and then apply for a reimbursement later.
How to Choose the Right Group Health Plan for Your Small Business
The first step in choosing the right group health insurance plan for your small business is to understand your needs. In other words, what does your business and your employees need out of your chosen health plan. To answer this question, consider the following:
- Who is going to be covered? Think about the diverse needs of your employees and your employee’s dependents. That way, you can choose a plan that is best suited to everyone’s unique financial and medical needs.
- How much cost sharing can you accommodate? The premiums for small business group health insurance are paid by both the employer and the participating employees. That said, make sure to think about the level of cost sharing that makes the most sense for your business.
- What benefits do you and your employees value? While legally you cannot ask your employees about their medical history, you can inquire about which specific benefits are important to them.
With this information in mind, you can start to evaluate and compare your small business health insurance options, with the goal of finding a plan that fits your employee’s needs and your business’ budget.
Frequently Asked Questions
Do small business owners have to offer health insurance?
The Affordable Car Act (ACA) states that small businesses with less than 50 employees are not legally required to offer health insurance to their employees. So, this means that businesses with 50 or more employees are legally required to provide affordable health insurance to their employees.
How much do employers pay for group health insurance? How much do employees pay?
In most cases, the employer covers no less than 50% of their employee’s monthly premiums. Then, the employee is responsible for the remainder of his or her premium and the full premium for any of his or her dependents. Though minimum contribution requirements vary from insurance company to insurance company and from one state to the next.
Do group health insurance plans also include vision and dental coverage?
Group health insurance plans do not traditionally include vision and dental coverage. Though, you can add them as benefit riders to your group health plan for an extra fee.