Starting and growing a small business comes with many challenges. One thing that all the top companies in Oregon have in common is caring for and appreciating their employees. Choosing the right health insurance program and plan for your employees is one of these aforementioned challenges but also a way to show you value and appreciate the health and wellness of your team. Employees consider health insurance one of the most important benefits an employer can offer them. This means it’s important to stay educated about this topic and fully aware of all your options. We want to try and make the journey of picking the perfect plan and program as straightforward as possible. Here a few key points to keep in mind when choosing your small business’ health insurance plan:
1. Understanding the main elements:
Coverage. If you are eligible for a small business health insurance plan, your coverage is generally guaranteed to be issued by the insurance company. This means that you, your employees, and your dependents cannot be denied coverage based on pre-existing medical conditions and that all eligible employees and their dependents can enroll in the new plan regardless of their medical condition(s).
Number of employees. To qualify for small business health insurance coverage, you must have at least one employee on your payroll. However, some states allow you to count yourself as both the business owner and an employee.
Employee premiums. You must pay at least 50% of the monthly health insurance premiums for your employees. The minimum percentage may vary depending on your state or insurance company.
Shopping for coverage. As a small business owner, you can shop around for health insurance coverage at any time, without needing to wait for your current plan to expire or for a special open enrollment period. Once you buy a plan you are typically locked in for at least a year, during that time you can add new employees and dependents or drop coverage for former employees. Once your contract is up, you have the option to renew or shop for a new plan.
2. Is a business owner required to offer health insurance?
Small businesses with fewer than 50 employees are not legally required to offer health insurance. For the health insurance to be considered “affordable,” the employee’s annual cost must be no higher than 9.78% of their annual income. Not offering health insurance subjects you to a penalty of $2,320 per full-time employee, excluding the first 30 employees.
If you have less than 50 employees it leaves you to ask the question, “Should I offer health insurance?” Running a small business is very costly already, which makes this an important question to ask and understand. Keep in mind that Group Coverage may cost less and cover more. Group insurance offers certain advantages over individual health insurance, including generally being more affordable and offering more extensive coverage.
The purchase of health insurance may help you qualify for tax credits if you purchase a plan through Small Business Health Options Program (SHOP) Exchange, an insurance portal created by the ACA. You must meet the following requirements:
- Have fewer than 25 full-time employees.
- Offer health insurance to all full-time employees.
- Pay salaries of less than $50,000 per full-time employee, on average, each year.
- Front at least 50% of the premium cost.
As a small employer, you can receive up to 50% of your contributions toward employee premiums, which can significantly reduce the costs of providing health benefits to your employees.
3. Types of health insurance options:
There are four main types of health insurance plans you can choose from for your small business.
PPO: “Preferred Provider Organization.” Persons covered under a PPO plan generally need to get their medical care from doctors or hospitals on the insurance company’s list of preferred providers in order for claims to be paid at the highest level. It’s your responsibility to make sure that the health care providers you visit participate in the PPO. Services rendered by out-of-network providers may not be covered or may be paid at a lower level.
A PPO plan may be right for you if:
- Your favorite doctor already participates in the network; you can sort for plans accepted by your doctor after getting quotes at eHealth.com
- You want some freedom to direct your own health care but don’t mind working within a list of preferred providers
HMO: “Health Maintenance Organization.” HMO plans offer a wide range of health care services through a network of providers that contract with the HMO, or who agree to provide services to members. Members of HMO plans will typically need to select a primary care physician (“PCP”) to provide most of their health care and refer them on to HMO specialists as needed. Health care services obtained outside of the HMO are typically not covered, except in an emergency.
An HMO plan may be right for you if:
- You’re willing to play by the rules and coordinate your care through a primary care physician
- You want to save every dollar possible; many HMO plans typically have lower monthly premiums than comparable PPO plans
EPO: “Exclusive Provider Organization.” EPO plans are similar to PPO plans but may be somewhat more restrictive when it comes to your network of doctors and hospitals. EPO plans typically do not provide you with coverage outside your network, except in emergencies. EPO plans are becoming more popular with health insurance shoppers, and health insurance companies are offering more of them as well. You’re generally not required to select a single primary care doctor with an EPO plan. An EPO plan may be right for you if:
- You don’t mind getting your care through a specific network of doctors and medical providers
- You prefer not to coordinate your medical care through a primary care doctor
HSA-eligible Plans: These are usually PPO plans with higher deductibles, designed especially for use with Health Savings Accounts (“HSAs”). Similar to a flexible spending account (FSA) or 401(k), an HSA is a special bank account that allows participants to save money on a pre-tax or tax-deductible basis to be used specifically for medical expenses in the future. Unlike FSAs, the money in an HSA rolls over every year and can also earn interest. By pairing a qualifying high-deductible health plan with an HSA, participants can save money on health care and earn a tax write-off. Find more information about HSAs online at www.ehealthinsurance.com/hsa. An HSA-eligible plan may be right for you if:
- You would like to pay for health care expenses with pre-tax dollars (up to an annual limit)
- You’re relatively young and healthy and don’t often visit the doctor
- You prefer a cheaper monthly premium even if it means having a higher deductible in case of unexpected injury or illness
4. Where can you find affordable health insurance plans? There are lots of ways to find health insurance plans that fit your needs as a small business. Some routes include:
- Calling a health insurance provider directly, like IBG
- Hiring an insurance broker
- Partnering with purchasing alliances or associations
- Using a PEO
- Using SHOP.
5. Speak with your employees.
Finally, when you have decided on the type of plan you will be choosing for your company, we recommend discussing it with your employees. Let them know what kind of plan you have decided upon, what its benefits are and how much will be deducted from their paychecks.
We wish you luck on your journey to find the perfect health insurance plan for your business and employees. Remember, if you ever need assistance or have questions about choosing the right health insurance plan for your Portland small business, our team at IBG is always happy to help.
InfoFAQ Interview