The Best Strategy for Health Insurance for Small Business
Employees are the beating heart of every company, and as such, their wellness should be the employers’ top priority. One of the best ways to show your employees you care is by offering them small business health insurance. Not only is this a great way to keep your employees healthy, happy, and productive, but it’ll also increase retention. It also helps businesses stay competitive, attract top talent, as well as reap some tax benefits.
The question is: how can you determine what’s the best strategy for health insurance for small business? Below, a couple of health insurance options to aid you in the decision-making process.
Health maintenance organization (HMO) plans
This type of health insurance plans are there to cover all the basic criteria of its subscribers. They also provide any supplemental health services. This insurance structure can be a private or public entity, and it’s composed of a group of medical insurance providers. By paying a monthly or annual fee, HMO’s subscribers are able to receive medical services from assigned providers. These providers are known as PCPs or primary care physicians. Some of the advantages of HMO or health maintenance organization plans include low premium and deductible costs and consistent care.
That said, there are certain limitations and restrictions that come with this health insurance plan. Before they’re able to see another doctor, plan participants need to request a referral from their primary care physician. They also can not choose any facilities and doctors that are not within the HMO network. Generally speaking, HMO plans are a good health insurance option for employees that don’t have any extensive needs when it comes to healthcare (e.g. companies with younger employees).
Self-funded health plans
As a small business owner, being able to control costs when it comes to your health insurance is very important. This is why self-funded health plans make such a great strategy. This type of health plan allows employers to stop losses, even in instances when claims exceed what was budgeted. Self-funded plans also make it possible for businesses to get the same high quality health benefits that come with traditional health insurance, only they would pay less.
While it’s true that they’re largely used by big enterprises, they also present one of the best small business health insurance options, whether they’re looking for medical coverage for 2 employees or for 300 of them. By choosing a self-insurance program, there’s no need to worry about claims payments, customer service and reporting. They will be taken care of. You’ll also ensure some great flexible features including access to PPO networks, a dedicated account manager, and flexible deductible options.
Small group health insurance
For a long time, small group health insurance was seen as a primary option for small business owners. It’s the type of health insurance that’s fully-funded. Generally speaking, it’s intended for businesses that have no more than 50 employees working full-time. The insurance comes at a reduced cost to members of the group, and it’s usually purchased by the employer. Ideally, the employer will pay a portion of premium costs as this can help with attracting and retaining employees.
As for the health plans, there is a wide range of options. We already mentioned HMO plans, but aside from those, employers can also get PPO and POS health plans. There are high-deductible health plans as well as indemnity plans that offer greater freedom to members (visiting hospitals they choose). While this type of health insurance can serve as an effective employee retention strategy, they’re also one-size-fits-all. There are also participation rate requirements as well as premium increases that occur annually and are unpredictable.
Health reimbursement arrangement (HRA)
If you’re looking for something more affordable, you may want to consider an HRA or health reimbursement arrangement. A tax-advantaged substitute for traditional insurance options, HRA operates on a reimbursement model.
For starters, the employer of the small business selects the HRA for their business. After that, they choose the sum they’ll contribute on a monthly basis. Then, all that’s left to do is inform the employees how they can use it. Once the employees make premium payments or pay for medical expenses, they can submit receipts for reimbursement. There are several types of HRA that work best for small business health insurance. These include ICHRA (Individual Coverage HRA) and QSEHRA (the Qualified Small Employer HRA). Budget control and tax efficiency are just some of the benefits you can reap by reimbursing for health insurance.
Finding the best strategy for health insurance for small business is a step in the right direction for companies that want to ensure employee wellness, maximize productivity, attract and retain top talent, and remain competitive in the fierce business world.
Needless to say, investing in the right health insurance policy comes with a long list of perks. With these tips in mind, you’ll choose the best health insurance option you’ll be proud to offer to your employees.