Health Insurance Basics for Small Business Owners. There’s a fine line between providing your employees with adequate healthcare coverage and going broke in the process. Fortunately, you don’t have to eliminate health insurance from the equation entirely. Thanks to smart business decisions that limit your liability without scrimping on quality care.
In this article, we’ll talk about some of the most common mistakes small businesses make when providing healthcare for their employees. We’ll also discuss how to avoid those mistakes and give your employees a valuable benefit at a price you can afford.
Factors to Consider When Paying Small Business Employees’ Health Insurance
One of the most brilliant things a business owner can do is assess precisely what they expect from their benefits package before diving into specifics. Be as detailed as possible, so there are no uncertainties later on. Here are some questions you should be able to answer before you make any purchases.
How Much Are You Willing to Pay Every Month?
What kind of coverage are you looking for, and does it have to include dental and vision? Consider if mental health services are a priority, or would your employees rather have extra coverage for elective procedures like Lasik eye surgery.
What Kind of Deductible Are You Prepared to Take On?
Look at the numbers. Think of how often your employees might get sick or injured during the year. How many of them probably won’t use their insurance at all because they’re healthy and rarely see the doctor? Factor in these numbers when choosing a deductible that works within your budget but still provides some flexibility.
How Will You Handle Preexisting Conditions?
One option is to not cover preexisting conditions until after your employee has been with you for a year. This may result in some time without coverage, but it can be enough to keep you from going into debt or being forced to deny coverage altogether if an employee gets sick right before their first year is up.
What Kind of Payout Structure Would Work Best?
You’ve probably heard that plans with higher monthly premiums tend to reimburse employees faster than cheaper options, but how does this work out when you’re paying the bills? How quickly will your employees see their benefits go up after they file claims?
How Will You Handle Wellness Visits?
If your plan includes coverage for routine exams and other preventative healthcare services, you should be prepared to pay for these benefits even if your employees never use them. Every year, a certain number of people get sick or injured even when they do everything right. You might feel better about offering coverage if you know it can make a difference in the case of an emergency.
After considering all of these factors, you’ll have a much clearer picture of what kind of insurance package will work best for both your employees and your business. This will help guide you towards more cost-efficient options that limit financial risk without sacrificing coverage or quality care for employees who need it most.
The Top 5 Health Plan for Small Businesses
When it comes to health care, there are plenty of options available. If you own a small business with less than 50 employees, you’re keenly aware of the increasing cost of medical insurance premiums and other related expenses. Choose the most affordable health plans for your employees.
Here are the top five types of plans available to employers with less than 50 employees.
Fee-For-Service (FFS) plans allow people to be reimbursed for medical expenses on a fee basis, regardless of whether the patient is admitted to a hospital or uses an outpatient facility. The insurance company negotiates rates with healthcare providers and then bills the employer or employee based on those rates.
According to Healthcare Bluebook, employees pay reduced rates compared with non-insured patients by using in-network medical facilities and healthcare professionals. These plans offer flexibility in benefits because employees can choose the facility, but they also may have high out-of-pocket expenses.
Preferred Provider Organizations (PPO)
A preferred provider organization is an insurance plan in which members get discounts when receiving medical services from providers of the network. These networks include prevalent local healthcare professionals and hospitals that offer discounted rates to patients.
This method is more cost-effective than receiving care at an in-network hospital with no discount. Employees pay less if they receive in-network services, but premiums will likely be higher than in a fee-for-service plan. Health care providers can choose whether or not they wish to become part of these networks, so some physicians might not be included even though they are in-network.
Health Maintenance Organizations (HMO)
The Health Maintenance Organization requires insured employees to obtain care from designated providers, eliminating their need to make healthcare decisions. If employees want outside care, they must obtain permission before receiving services, according to Healthcare Bluebook. This method could save employers money because patients are limited to medical professionals within the network.
However, it also may result in increased costs due to less patient choice. Employees may experience longer wait times for appointments since health providers are more accustomed to treating patients with less flexibility. Employers might not like the lack of network flexibility due to overcrowding when everyone uses an HMO group practice or hospital, which can increase costs for employers who have a fee-for-service plan.
Point-of-Service (POS) Plans
The two most common forms of point-of-service plans are POS HMO and POS PPO. This plan is similar to an HMO but allows flexibility if employees need urgent or emergency care. According to Healthcare Bluebook, employees can receive urgent or emergency care outside the network as long as they pay a lower deductible.
Providers who offer these types of plans bill patients first before sending claims to insurance companies, so providers might accept lower reimbursements if it means they will get paid. However, this practice results in higher out-of-pocket costs for patients.
Health Reimbursement Agreements (HRA)
An employer contributes a set amount to an HRA that employees can use for medical expenses. This method lowers out-of-pocket costs for employees, but employers should note that it increases taxable wages since the employer contributes money to the HRA and then deducts it from paychecks. Employers might benefit from these plans because they do not require considerable upfront investment and typically have a high deductible.
If you are concerned about health insurance for small businesses, you can choose one of the mentioned plans that best suits your company. You can also use the provided guidelines to choose the right health plan.
Choosing the right health insurance plan can be a daunting task. But with these guidelines, you should have an easier time making a decision that’s best for your company and employees. If this isn’t enough information or if you need more assistance choosing a plan, visit Rutledge Insurance Group LLC to speak with one of our qualified agents who will help guide you through the process while considering what makes sense for your small business needs. We offer competitive rates on all of our plans so get in touch today!