Small Business Health Insurance

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Small businesses are a vital component of the economy, employing millions of people in the United States. However, small business owners often face challenges in providing affordable and comprehensive health insurance to their employees. In this section, we will define small business health insurance and highlight its importance for small businesses.

Definition of small business health insurance:

Small business health insurance refers to health insurance coverage provided by a small business to its employees. In the United States, small businesses are generally defined as those with fewer than 50 employees. Small business health insurance plans are typically group health insurance plans, which means that the business owner purchases insurance coverage for the entire group of employees. These plans may offer a variety of coverage options, including medical, dental, and vision insurance.

Importance of small business health insurance:

Small business health insurance is crucial for several reasons. First and foremost, it helps to attract and retain talented employees. In today’s competitive job market, employees are looking for comprehensive benefits packages that include health insurance. By offering health insurance, small businesses can compete with larger corporations for the best talent.

Secondly, small business health insurance can help to improve employee health outcomes. When employees have access to affordable and comprehensive health insurance, they are more likely to seek preventative care and address health issues before they become more serious and costly. This can lead to healthier employees and lower healthcare costs for both the employer and the employee.

Finally, small business health insurance can help small businesses to save money. By offering health insurance, small businesses may be eligible for tax credits and other cost-saving measures. Additionally, healthy employees are more productive and have lower absenteeism rates, which can ultimately improve a small business’s bottom line.

In conclusion, small business health insurance is essential for both small businesses and their employees. It can help to attract and retain talented employees, improve employee health outcomes, and save money for small businesses.

Benefits of Small Business Health Insurance

Small business health insurance has numerous benefits for both employers and employees. Some of the most significant advantages of providing health insurance for small businesses include:

  1. Provides access to healthcare services: By offering health insurance, small businesses can provide their employees with access to healthcare services that they may not have been able to afford otherwise. This can help employees get the medical attention they need to stay healthy and productive, which can ultimately benefit the business as a whole.
  2. Helps retain and attract employees: Offering health insurance can be a powerful tool for attracting and retaining talented employees. Employees value benefits like health insurance, and businesses that offer these benefits are often more competitive in the job market. This can help small businesses attract and retain the best talent, which can be essential for growth and success.
  3. Tax benefits for employers: Small businesses that offer health insurance may be eligible for tax benefits. In many cases, the cost of providing health insurance is tax-deductible for businesses, which can help offset the cost of the premiums.
  4. Cost savings for employees: Health insurance can help employees save money on healthcare costs, which can be a significant financial burden for many people. By pooling resources and negotiating rates with healthcare providers, small business health insurance plans can often provide more affordable coverage than individual plans.

Overall, small business health insurance can provide significant benefits for both employers and employees. By offering access to healthcare services, helping retain and attract employees, providing tax benefits for employers, and offering cost savings for employees, small businesses can use health insurance to build a healthier, more productive, and more successful workplace.

Best Health Insurance Companies for Small Businesses

  • Best Overall: Blue Cross Blue Shield
  • Best for Telemedicine: Oscar
  • Best for Customer Satisfaction: Kaiser Permanente
  • Best for Extra Benefits: UnitedHealthcare
  • Best Self-Insured Plans: Aetna

BEST OVERALLBlue: Cross Blue Shield

4.7

Pros and Cons

Pros

  • Nationwide availability
  • Wide provider network
  • Offers a variety of workplace wellness programs
  • Blue365 provides employees with discounts on health products and services

Cons

  • J.D. Power rating varies by region

Why We Chose It 

With coverage in every U.S. ZIP code and a variety of national networks to choose from, Blue Cross Blue Shield can meet the needs of almost any business. The company was also our top pick for the best health insurance provider overall. But since BCBS is a group of companies, benefits vary by region, as do customer satisfaction ratings. It’s important to evaluate your BCBS company for issues like customer complaints. 

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BCBS workplace wellness programs vary by state, but as an example, BCBS Mississippi trains company leaders to teach fitness classes, and offers a significant reduction in health insurance premiums for employees who commit to working out at least twice per week. Other benefit offerings vary by region as well, but Anthem offers 24/7 virtual care, a convenient mobile app, a variety of plan types, and the option to bundle health coverage with dental, vision, life, and/or disability insurance. And the Blue365 discount program provides your employees with robust discounts on wellness-related products and services.

BEST FOR TELEMEDICINE: Oscar

4.4

Pros and Cons

Pros

  • $0 virtual urgent care available 24/7
  • Access to Cigna’s network with no referrals needed
  • A convenient mobile app with rewards for walking

Cons

  • Limited geographical availability

Why We Chose It

Oscar makes it easy for your employees to request virtual care from a convenient mobile app, and with most plans, there’s no cost to talk to a doctor online. Employees can also use the app to refill their prescriptions, message their care team, track their deductibles, and even get rewarded for meeting their step goals. What’s more, Oscar has partnered with Cigna to give members access to the company’s national and local provider networks. You can give your employees two network options, both of which don’t require specialist referrals and which include the Cigna Behavioral Health Network. 

However, availability is limited to a few different states, cities, and metro areas: Georgia, Tennessee, Connecticut, select Arizona counties, select California counties, the Philadelphia metro area, Kansas City, Chicago, and St. Louis.

BEST FOR CUSTOMER SATISFACTION: Kaiser Permanente

4.1

Pros and Cons

Pros

  • Ranked highly by J.D. Power for customer satisfaction
  • 4.3-star NCQA rating
  • Administers health payment accounts (HRA, HSA, or FSA) for deductible plans
  • Offers complementary care, vision, and dental plans

Cons

  • Limited geographical availability

Why We Chose It

Kaiser Permanente received the best third-party member experience ratings of any insurer we reviewed. Its average NCQA rating is 4.3 stars (higher than all other providers). And it came in first for customer satisfaction in five of 22 regions—this is significant because it’s only available in eight states and Washington D.C. What’s more, Kaiser offers a range of health plan options, from PPO plans to deductible HMOs that can be paired with a health savings account or health reimbursement arrangement. And it’s affordable to add extra benefits for your employees, which include not only dental and vision, but also complementary care, such as acupuncture and chiropractic. 

However, Kaiser Permanente plans are only available in California, Colorado, Georgia, Hawaii, Maryland, Virginia, Oregon, Washington, and the District of Columbia. And while the company provides resources and support for establishing a workplace wellness program, Kaiser is less hands-on than some Blue Cross Blue Shield companies when it comes to specific workplace programs. The company does, however, offer a variety of fitness discounts, and members can speak with a wellness coach at no cost.

BEST FOR EXTRA BENEFITS: UnitedHealthcare

3.7

Pros and Cons

Pros

  • Offers a variety of extra benefits beyond just vision and dental
  • Offers options for part-time and seasonal workers
  • A+ (Superior) financial strength rating with AM Best
  • Nationwide availability

Cons

  • Customer satisfaction varies by region

Why We Chose It

UnitedHealthcare allows you to offer employees a variety of choices for plan types. It even provides bundled savings when you choose to offer additional coverage, such as vision, dental, hearing, and disability and absence benefits, plus supplemental, pet, and life insurance benefits. UnitedHealthcare also offers a unique program designed for part-time and seasonal workers, which is the only such program available nationwide. Level-funded and fully insured options are available for traditional major medical coverage, and a lower-cost, level-funded, limited minimum essential coverage option is also available. In addition, UHC offers a variety of workplace wellness programs, including a no-cost virtual weight loss program and rewards for physical activity. Group health plans include a discount program as well.

UnitedHealthcare also boasts relatively strong third-party ratings, with an average NCQA rating of 3.5 stars and an A+ (Superior) financial strength rating from AM Best, the highest grade of any of the featured providers on this list. However, the company’s customer satisfaction rating in the J.D. Power 2022 U.S. Commercial Member Health Plan Study varies by region.1 For example, the company was ranked lowest (out of seven providers) in Florida, but ranked second in the Heartland. 

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BEST SELF-INSURED PLANS: Aetna

3.7

Pros and Cons

Pros

  • Offers self-insured funding options
  • Offers a suite of more than 70 wellness programs
  • Dedicated support for new business onboarding
  • $0 MinuteClinic copays for self-insured members

Cons

  • MinuteClinic benefits not available to f

Types of Small Business Health Insurance

Small businesses have several options when it comes to providing health insurance for their employees. Here are some of the most common types of small business health insurance:

  1. Group Health Insurance: This type of insurance is designed for businesses with 2 or more employees. Group health insurance policies are purchased by the employer and cover all eligible employees and their dependents. Group health insurance policies usually offer comprehensive coverage, including medical, dental, and vision benefits. The cost of group health insurance is usually shared between the employer and employees.
  2. Health Savings Account (HSA): An HSA is a savings account that allows employees to set aside pre-tax money to pay for qualified medical expenses. This type of account is available to individuals who are enrolled in a high-deductible health plan (HDHP). HSAs can be a cost-effective way for small businesses to provide health insurance, as they often have lower premiums than traditional health insurance plans.
  3. Health Reimbursement Arrangement (HRA): An HRA is an employer-funded account that reimburses employees for qualified medical expenses. HRAs are often used in conjunction with high-deductible health plans to help offset out-of-pocket costs for employees. HRAs can be a flexible option for small businesses, as the employer determines the amount of money that goes into the account.
  4. Affordable Care Act (ACA): The ACA, also known as Obamacare, is a federal law that requires individuals to have health insurance coverage or pay a penalty. Small businesses with fewer than 50 employees are not required to provide health insurance under the ACA, but they may be eligible for tax credits if they choose to offer coverage. The ACA also created the Small Business Health Options Program (SHOP), which allows small businesses to shop for and purchase health insurance plans for their employees.

Choosing the Right Small Business Health Insurance Plan

Choosing the right health insurance plan for your small business is an important decision that can have a significant impact on your employees’ well-being and your company’s bottom line. To make an informed choice, you should consider several factors.

First, you need to assess the healthcare needs of your employees. This includes considering their age, health status, and any pre-existing conditions they may have. You also need to think about the types of services they are likely to use, such as preventive care, prescription drugs, or specialist visits.

Once you have a good understanding of your employees’ healthcare needs, you can start comparing different plans and coverage options. Look for plans that offer the services your employees need at a reasonable cost. You may also want to consider the network of healthcare providers and facilities that each plan offers, as well as any restrictions on out-of-network care.

When evaluating costs, it’s important to consider both the premiums (the amount you pay each month for coverage) and the out-of-pocket costs (such as deductibles, copays, and coinsurance). You should also look at the annual limits on coverage, which can vary widely between plans.

Finally, you may want to consult with an insurance broker to help you navigate the complex world of health insurance. A broker can help you compare plans, understand the details of each option, and negotiate better rates on behalf of your business.

By taking the time to assess your employees’ needs, compare plans, evaluate costs, and consult with experts, you can choose a health insurance plan that meets your business’s needs and provides your employees with the care they need to stay healthy and productive.

Implementing Small Business Health Insurance:

Enrollment Process and Deadlines: As a small business owner, it is important to understand the enrollment process and deadlines for offering health insurance to your employees.

Typically, there are specific open enrollment periods during which employees can sign up for coverage. It is important to communicate these deadlines clearly to your employees, so they do not miss out on the opportunity to enroll.

Additionally, if an employee experiences a qualifying event, such as getting married or having a child, they may be able to enroll outside of the open enrollment period. Make sure you are aware of these rules and communicate them to your employees as well.

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Communicating with Employees: When implementing a small business health insurance plan, communication with employees is key. It is important to explain the benefits and costs of the plan, as well as any limitations or restrictions.

Clear communication can help employees feel more informed and satisfied with their coverage. Additionally, it is important to have a system in place for employees to ask questions and receive assistance with any issues they may have with their coverage.

Managing the Plan and Benefits: Managing a small business health insurance plan can be a complex process. It is important to have a dedicated person or team to oversee the plan and ensure that it is running smoothly.

This includes working with the insurance company to manage claims, making sure that premiums are paid on time, and handling any issues that may arise.

Additionally, it is important to review the plan on a regular basis to ensure that it continues to meet the needs of your employees and your business.

Frequently Asked Questions

How Do I Get Health Insurance for a Small Business?

If you’re self-employed, check the best health insurance companies for self-employed workers. Otherwise, you have a couple of options: The first is to work directly with a private insurer to get a fully-insured or self-funded plan. The second is to compare plans offered through the Small Business Health Insurance Options Program (SHOP), and to purchase coverage directly or with help from a broker. 

While this program offers robust options in some states, others have limited or no plans available. Generally, getting SHOP coverage is the only way to claim the Small Business Health Care Tax Credit, which could save you up to 50% on your premium contributions. You must meet other eligibility requirements as well.

Do Small Businesses Have to Provide Health Insurance?

No employer is required to offer health coverage for its employees, but companies with at least 50 employees that do not offer health coverage are subject to the Employer Shared Responsibility Payment. If you choose to offer health insurance coverage to your full-time employees, you must offer it to all full-time employees once they become eligible, and there is a 90-day maximum waiting period.

How Much Does Small Business Health Insurance Cost?

Your total cost will depend on several factors, including the location of your business and the type of network you choose. In 2021, businesses with fewer than 200 employees spent an average of $6,569 per employee on annual health insurance premiums for single coverage and $14,094 for family coverage.2 Experts generally recommend keeping group health insurance costs between 10% and 20% of your annual revenue. 

What Is a Self-Insured Health Plan?

A self-insured health plan is a type of group health insurance in which the employer collects premiums and is responsible for paying claims when employees need care. These plans can be self-administered, or the business may work with an insurance provider to get stop-loss coverage and administrative support. 

There are several benefits to self-funded plans. Employers can keep surplus premiums (or receive a portion returned by the stop-loss carrier), plans can be customized to a greater degree, and certain ACA provisions that lead to high costs can be avoided. Increasingly, small businesses are opting for self-funded coverage. But self-insured plans aren’t right for every business.

Conclusion

Small business health insurance is essential for both employers and employees. Providing health insurance coverage can attract and retain quality employees, reduce absenteeism, and improve overall productivity. It also ensures that employees have access to necessary healthcare services, promoting their health and wellbeing.

In light of this, small business owners should consider investing in health insurance coverage for their employees. It may seem like an added expense, but the benefits far outweigh the costs in the long run. By providing insurance coverage, business owners can show their employees that they value their health and wellbeing.

In conclusion, small business health insurance is crucial for the success of both the business and the employees. As such, small business owners should explore their options and choose a plan that suits their needs and budget. By prioritizing the health and wellbeing of their employees, small businesses can thrive and achieve long-term success.