Health insurance is critical for any small business looking to attract and retain talented employees. However, finding an affordable health insurance plan that also provides adequate coverage can be difficult for small business owners with limited funds. This article will look at the options available for small businesses that want to provide health insurance to their employees.
Employees’ Health Insurance Needs
When evaluating health insurance plans, you should first consider your employees’ needs and preferences. Consider factors such as:
- Age and health status of your employees – Different age groups and those with chronic conditions may require different coverage for items such as prescription drugs, vision, and dental care. An anonymous survey can help determine which benefits employees value the most.
- Cost sensitivity: If keeping premiums low is important, plans with higher deductibles and copays may be preferred. If low out-of-pocket costs are more important, choosing plans with higher premiums but lower deductibles may be prudent, even if it means stretching the budget further.
- Family plans – If your small business employs a large number of parents and couples, making family plans available at reasonable rates should be a top priority.
- Assessing these key factors will help you find the best balance of coverage, affordability, and employee satisfaction.
Health Insurance Options for Small Businesses
Small Business Health Insurance Marketplaces
The Small Business Health Options Program (SHOP) marketplaces, which are run by either states or the federal government, connect small businesses to health plans available in their area. All plans include essential health benefits and pre-existing conditions. Businesses with 50 or fewer full-time employees can enroll, though some states set a limit of 100 employees. Small businesses using SHOP plans may be eligible for tax credits that reduce premium costs.
Private Health Insurance Plans
Workplaces that are too large for the SHOP marketplaces can purchase small group health insurance plans from private insurers. Private plans provide more flexibility in terms of benefits, allowing businesses to better tailor to employee needs and budgets. Drawbacks include higher and rising premiums over time, limited provider networks, and less transparency on plan quality compared to SHOP options.
Self-Insured Health Benefits
Self-insuring health benefits is a third option available only to larger workplaces with more than 50 employees. This entails directly covering employee healthcare costs and managing claims, resulting in financial risk. Companies can hire third-party administrators to manage day-to-day operations. While it is more expensive to set up, self-insurance gives businesses more control over the benefits packages they offer. It also exempts businesses from certain regulations and taxes that are incorporated into fully insured plans.
Key Considerations for Comparing Small Business Health Insurance
Coverage Networks and Choices
Check that any insurance plans under consideration provide affordable access to nearby in-network providers that employees frequently see for care. Having a diverse range of primary care doctors, specialists, hospitals, pharmacies, and other facilities ensures that staff’s care needs are consistently met. Compare provider directories and prescription formularies between plans carefully.
Premiums and out-of-pocket expenses
Calculate total costs by adding monthly premiums, deductibles, copays, coinsurance, and maximum out-of-pocket limits from different plans. Consider higher premium options with lower deductibles versus those with lower monthly costs but significantly higher expenses incurred before coverage kicks in. Finding the right balance for your budget and employees by cost-sharing across these components is critical.
Plan Administration and Support
Evaluate how easy or difficult it is for each insurer or administrator to understand coverage details, resolve claims issues, access support services, or navigate websites and applications. Although inconvenient, opaque, and unhelpful, administration frustrates staff seeking care. Employees value well-organized and responsive support systems.
Employee Contribution and Incentives
Consider reasonable premium contributions for single and family tiers that are consistent with staff budgets. Create cost-sharing structures that encourage employees to receive high-value care, such as lower deductibles for primary care. Encourage preventative care participation by lowering out-of-pocket expenses. These changes make benefit packages more financially viable and sustainable.
Sustainability Year-over-Year
The financial sustainability of any health plan you choose must account for reasonable premium increases year after year while also improving affordability over time through cost-sharing and innovative benefit structuring. This ensures that employees can rely on coverage at predictable costs, even as plan expenses rise.
How to Choose the Best Health Insurance for Your Small Business
Evaluating Small Business Health Insurance Plans
With so many marketplace, private insurance, and self-insured options available, each with an infinite number of plan combinations, choosing the right small business health benefits package can be overwhelming. Simplify with a step-by-step procedure:
- Determine an affordable monthly premium budget for each employee tier, accounting for reasonable annual increases, and allocate additional amounts that employees can contribute through payroll deductions.
- Estimate expected healthcare expenses based on staff demographics and identify costs that your contributions aim to cover, such as lower deductibles, as opposed to higher out-of-pocket costs paid by employees.
- Use online plan comparison tools from federal and state-run marketplaces or independent vendors to narrow down options that meet affordability criteria to 5-10 optimal plans. Compare network adequacy, premiums, deductibles, out-of-pocket limits, and services provided.
- Examine insurers that offer the best fit for reputation, transparency, claims administration infrastructure, and support, as well as data security and healthcare quality ratings in comparison to industry benchmarks.
- Request RFPs from 2-3 top insurers outlining your specific coverage priorities, affordability metrics, and transparency expectations to determine which proposal and pricing are most aligned.
Before enrolling, confirm the best balance of premium contributions, tax credits (if applicable), deductibles, and other cost-sharing that will fit your budget. Adjust annually for healthcare inflation to maintain affordability.
Leveraging the Benefits Package for Recruiting
Boosting recruiting and retention is an important incentive for small businesses that offer health insurance despite tight budgets. Touting benefits not only attracts talented applicants, but it also communicates a commitment to employee well-being, which inspires loyalty and increased productivity from employees. Prepare recruiters to confidently explain your insurance options and any additional health-related benefits available. When posting job openings, include “competitive health benefits” in the job description. Invest in both insurance and advertising to demonstrate your commitment to employee health.
Conclusion
Many small businesses continue to face challenges in providing health insurance due to rising costs and premiums. However, access to affordable healthcare coverage has become a must-have for employers seeking to attract and retain talented employees. Taking the time to carefully evaluate all available options, assessing employee preferences, and structuring creative cost-sharing that maintains year-over-year budgets has advantages for recruitment, productivity, and your company’s mission. Employee health insurance needs should be prioritized alongside other must-pay bills to ensure that your most valuable assets, your employees, are supported.
