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One of the best ways to obtain health insurance is through your employer. Nearly 50% of Americans are on a group insurance plan through their employer.
This is ideal because the employer will often pay a significant percentage of the monthly premium, which large corporations see as a way to recruit and retain quality employees.
Offering employees health insurance is slightly more challenging for small businesses with less revenue. Read on to learn about the different types of small business health insurance, including costs and plan details.
Choosing an insurance plan for your small business depends on a number of different factors, such as your employees’ medical needs and the company budget for health insurance.
Preferred Provider Organization (PPO)
PPOs are the most expensive type of plan but are known for their flexibility. Employees’ medical needs are covered at a greater percentage when they see an in-network doctor.
Out-of-network doctors and facilities also are covered; however, the health insurance plan pays for a lower share of the costs.
You do not need to get a referral to see a specialist with a PPO. People feel comfortable with this type of plan knowing that their insurance will cover their health costs regardless of when and where they need care.
Health Maintenance Organization (HMO)
HMOs are more structured and rigid than PPOs. Employees are required to see a doctor that is in-network. They will not receive any coverage when seeing a care provider out-of-network.
In addition, HMOs require that their members have a Primary Care Physician (PCP). In order to see a specialist, you need to see a PCP first and get a referral. HMOs are still popular because they are often less expensive than PPOs.
Health Savings Account (HSA) Plans
HSAs work like a savings account where you make pre-tax deductions from your paycheck into an account dedicated to medical needs.
The benefit of this plan type is keeping costs to a minimum. You also get access to negotiated rates between insurance companies and medical providers.
Exclusive Provider Organization (EPO)
EPOs fall in between PPO and HMO coverage. They are more restrictive than PPOs and limit out-of-network coverage. EPOs do provide some out-of-network relief when there is a medical emergency. The cost of an EPO is usually more affordable than a PPO and members enjoy that they do not need a PCP referral to see a specialist.
What are the Costs?
Small business health insurance costs will depend on the plan type and the number of employees. The primary benefit of group health insurance is reducing costs as the insurance company is able to spread the risk across many employees.
There are also tax benefits to offering group insurance. Small business health insurance costs are reduced as employer contributions are tax-deductible and tax credits are also available.
As an employee, a group health insurance plan means a lower monthly premium. Additionally, premiums are deducted pre-tax meaning more money stays in the employees’ paycheck.
Is Group Health Insurance Right for Your Small Business?
There are good reasons that millions of Americans sign up for group health insurance. They are capitalizing on lower rates and access to high-quality medical coverage. Different plan types allow you to choose what works best for your company and employees, while managing the bottom line.
